New forecasts
ECB: Despite the customs dispute, more growth in the euro area
The economy in the currency area can cope with the increased US tariffs under Trump better than feared. Now the ECB reacts and raises its forecast. However, inflation should be a bit higher.
The European Central Bank trusts the economy in the euro area a little more growth this year than three months ago. The gross domestic product in the 20 countries with the shared currency is likely to increase by 1.2 percent in the current year according to the youngest ECB forecast. In June, the central bank predicted 0.9 percent growth.
Despite the increased US tariffs, the economy in the euro zone proves to be more robust than expected. With the customs agreement between Brussels and Washington, the horror scenario of an escalation in the trade dispute with counterparts and a shock for the economy in Europe failed to do so.
The ECB slightly reduced its growth forecast for 2026 from 1.1 percent to 1.0 percent, for 2027 the central bank expected 1.3 percent plus. The planned defense spending in Europe in billions in Europe should provide a boost.
Inflation near ECB target mark
According to the latest assessment of the central bank, inflation in the euro area will be slightly above the target brand of 2.0 percent this year. In June, the ECB had predicted a point landing. Most recently, the price level, for example in Europe’s largest economy in Germany, had again slightly attracted.
The most important task of the ECB is to ensure a stable euro and thus maintain the purchasing power of the people. The central bank reaches its goal of stable prices in the medium term with an inflation rate of 2.0 percent in the euro area.
For 2026, the ECB now expects an average increase in consumer prices in the currency area of 1.7 percent. So far it had assumed 1.9 percent. For 2027, the central bank predicts an annual inflation of 1.9 percent.
dpa
Source: Stern
