Euro Area 2026 Growth Forecast Cut to 0.9% as High Energy Prices and Weak Consumer Sentiment Bite

The euro area suffered one of the largest downward revisions among advanced economies. The IMF lowered its 2026 growth projection for the region by 0.2 percentage points from the April forecast to 0.9%, while the 2027 estimate was kept at 1.2%.

The report states that despite some fiscal buffer measures, the drag from high energy prices and persistently weak consumer confidence have negatively impacted the euro area economy. Specifically, Germany is expected to grow by only 0.7%, France’s forecast was cut to 0.6%, and Italy is seen expanding at a meagre 0.5%.

An earlier IMF statement on the euro area in June had already warned that, due to more persistent energy supply disruptions, the region’s 2026 growth would be 0.5 percentage point lower than pre‑war estimates, while headline inflation would be 0.8 percentage point higher. The euro area, with its heavy reliance on energy imports and limited participation in the technology value chain, finds itself at a disadvantage in the global economic divergence.