ECB survey: 2025 GDP growth seen at 1.1% vs 0.9%, 2026 at 1.1% vs 1.2%

ECB survey: 2025 GDP growth seen at 1.1% vs 0.9%, 2026 at 1.1% vs 1.2%

Title: ECB Survey: 2025 GDP Growth Revised Up to 1.1% vs 0.9%, 2026 at 1.1% vs 1.2%

In its latest survey, the European Central Bank (ECB) has revised its expectations for real GDP growth in 2025 and 2026. The ECB now anticipates a growth rate of 1.1% for 2025, up from the previous estimate of 0.9%, and 1.1% for 2026, down from the prior forecast of 1.2% [1].

These revisions reflect the ECB's assessment of the current economic environment, which has been influenced by various factors. The survey indicates that while firms have frontloaded exports ahead of expected tariff hikes, higher actual and expected tariffs, the stronger euro, and persistent geopolitical uncertainty are making firms hesitant to invest. However, the robust labor market, rising real incomes, and solid private sector balance sheets continue to support consumption [2].

The ECB's revised growth expectations come amidst a backdrop of continued uncertainty in the global economy. Trade disputes and geopolitical tensions remain significant risks, which could dampen exports and drag down investment and consumption. However, the ECB also notes that an improvement in business confidence could stimulate private investment and lift sentiment, potentially boosting growth [2].

The ECB's interest rate decisions are closely tied to its assessment of the inflation outlook and the risks surrounding it. The Governing Council decided to keep the three key ECB interest rates unchanged, emphasizing a data-dependent and meeting-by-meeting approach to monetary policy. The ECB is not pre-committing to a particular rate path and stands ready to adjust all of its instruments within its mandate to ensure that inflation stabilizes at its two per cent target in the medium term [2].

In conclusion, the ECB's revised GDP growth expectations reflect a nuanced view of the current economic landscape. While the outlook remains uncertain, the ECB's monetary policy stance is designed to support economic growth and maintain price stability.

References
[1] https://www.ecb.europa.eu/press/pr/date/2025/html/ecb.pr250725~2c8aaa2009.en.html
[2] https://www.ecb.europa.eu/press/press_conference/monetary-policy-statement/2025/html/ecb.is250724~a66e730494.en.html