Eurozone Growth to Slow in 2025 Despite Strong Start – Standard Chartered

Eurozone Growth Slows, Recession Risks Rise, but Recovery Expected by 2027

Standard Chartered maintains its eurozone growth forecast for 2025 at 0.8%, despite a strong Q1 performance, cautioning that early-year gains do not reflect the outlook for the rest of the year. According to economist Christopher Graham, recession risks remain elevated in the near term due to rising trade tensions with the United States, particularly as new tariffs weigh on demand for eurozone exports.

The forecast for 2026 has been revised down to 1.0% from a previous estimate of 1.2%, citing the carry-over effects of a weak end to 2025. However, the longer-term outlook is more optimistic. Growth is expected to rebound in 2027, driven by structural support from increased German fiscal spending and pan-European defense investments. As a result, Standard Chartered has raised its 2027 growth forecast to 1.6% from 1.1%.

Graham notes that while trade with the U.S. is expected to remain under pressure, the eurozone could gradually replace some of that lost demand through increased trade with other global partners. Even in the event of a negotiated settlement, the eurozone is likely to face tariffs in the 10–20% range, which would continue to act as a drag on economic momentum, though not as severely as in worst-case scenarios.