The eurozone is emerging from a period of stubborn inflation and high interest rates, with growth now a central focus for policymakers. According to the OECD’s latest Economic Outlook, real GDP growth across the region is expected to remain modest over the next two years, with notable variations between countries.
In 2025, Ireland is projected to record the strongest growth among OECD countries at 10.2 percent, driven primarily by front-loaded pharmaceutical exports ahead of U.S. tariffs. However, analysts caution that Ireland’s GDP figures can be distorted by the concentration of multinational profits in the country due to its low corporate tax rates. By contrast, Finland is expected to show no growth in 2025, hampered by weak consumer confidence and a sharp slowdown in housing construction.
Across the eurozone, overall growth is set to ease slightly from 1.3 percent in 2025 to 1.2 percent in 2026, before rising to 1.4 percent in 2027. The OECD attributes this to improved financial conditions, ongoing capital investment funded through the Recovery and Resilience Facility (RRF), and resilient labour markets. The RRF, established by the European Commission, provides member states with funding for reforms and investment to strengthen post-pandemic economic recovery.
Among Europe’s 27 countries, Turkey and Poland are projected to lead in 2026, each growing by 3.4 percent, followed by Lithuania at 3.1 percent. These three nations are expected to surpass the global average of 2.9 percent. At the lower end, Italy is forecast to grow only 0.6 percent, with Austria and Finland both at 0.9 percent.
Spain stands out among the eurozone’s top five economies, with growth projected at 2.2 percent in 2026, supported by strong job creation, real wage gains, and ongoing investment under its Recovery, Transformation, and Resilience Plan. The UK is expected to expand by 1.2 percent, while Germany and France are projected at 1 percent. Fiscal consolidation in France and Italy, along with government spending limits in the UK, will constrain growth, while Germany benefits from increased spending on infrastructure and defence.
Looking ahead to 2027, Spain will continue to lead among the top five economies, though growth is expected to slow to 1.8 percent. Germany’s economy is projected to accelerate to 1.5 percent, while the UK and Italy see only minor improvements, and France remains at 1 percent. Finland, after a 2025 recession, is expected to recover gradually with growth of 0.9 percent in 2026 and 1.7 percent in 2027, supported by lower interest rates, a stabilising housing market, rising defence expenditure, and stronger trading partner growth.
The OECD notes that risks to output remain, including global trade tensions, potential weakening of labour markets, and the impact of US tariffs. Nonetheless, advances in technology, improved financial conditions, and continued capital investment are expected to underpin a gradual recovery across much of the eurozone in the coming years.
