The International Monetary Fund (IMF) has warned of sluggish economic growth in the eurozone over the coming years, citing rising energy costs and persistent inflation as major challenges. According to the IMF’s latest World Economic Outlook released on October 13, the eurozone’s economic growth is projected at 1.1% in 2026 and slightly higher at 1.2% in 2027. This forecast underscores ongoing economic pressures fueled by geopolitical tensions, including Russia’s conflict with Ukraine and unrest in the Middle East.
In comparison to earlier estimates made in July, the IMF has adjusted its 2026 growth forecast upwards by 0.2 percentage points. Despite this revision, the forecast remains below the 1.2% growth rate anticipated for 2025. Inflation is predicted to remain a persistent issue, expected to reach 3.1% in 2026 before easing to 2.8% in 2027—still above the European Central Bank’s target of 2%.
High energy prices, coupled with weak consumer confidence, are likely to continue impacting household spending and business investment across Europe. Additionally, the IMF has highlighted that below-normal gas storage levels in parts of Europe could expose consumers to further price hikes during the winter months.
The economic outlook varies among major European countries. Germany’s growth is projected at 1.3% in 2026, while Spain is expected to see a more robust expansion of 2.5%. France, on the other hand, faces a more subdued growth prediction of just 0.4%. In the United Kingdom, growth is anticipated to rise to 1.3% in 2026 but slow to 1.2% in 2027 as the country grapples with rising energy prices and borrowing costs.
The IMF also drew attention to the economic risks faced by Middle Eastern economies, particularly those of Gulf oil exporters, which could see significant production and export declines before a potential recovery in 2027, contingent on regional conflict developments. Meanwhile, oil-importing countries in the Middle East might benefit from factors like domestic demand and tourism, but disruptions in shipping routes could pose threats to regional trade.
On a global scale, the IMF noted the growing significance of artificial intelligence-related goods in driving trade, with a 29% increase in trade of these products from 2023 to 2025, compared to an 8.3% rise in overall global trade. However, the Fund cautioned that the economic benefits from AI depend on whether investments lead to real productivity improvements, warning that weakened expectations for future profits could disrupt financial markets and pose additional risks to global growth.