EU economic growth in 2024 came in at 1 %, marginally stronger than expected, on account of strong public consumption, while overall investments contracted and net exports’ contribution to GDP growth was broadly neutral when excluding Ireland. External trade and the general economic sentiment have been heavily influenced by uncertainty created by trade policy shifts in the US. Despite the unpredictability of the eventual global trade order and the final tariff configuration, according to the latest Commission spring forecast EU economic growth is projected at 1.1 % in 2025, and 1.5 % in 2026. This marks a significant downward revision compared to previous forecasts, mainly reflecting the ambiguity in the current economic environment.
This has resulted in increased anticipatory goods trade to avoid tariffs. EU goods exports to the US have surged in the first quarter of 2025, to €71.4 billion, up 59 % from a year earlier. In particular, the pharmaceutical industry frontloaded exports, seeking to forestall the implementation of tariffs. By April 2025, anticipatory trade had subsided as elevated inventories are getting run down. The surge in global uncertainty triggered by the announcement of US tariffs is expected to dampen growth prospects within the EU. Over the next two years, the EU’s cumulative growth is projected to average 2.6 %, with export-reliant nations facing comparatively weaker performance.
Comments are closed for this post.