Chief Economists Outlook January 2026

Europe Europe is expected to have the weakest growth outlook among all regions for the year ahead, according to the chief economists surveyed. More than half of respondents (53%) now expect weak growth, compared to 40% in September 2025. Real GDP is projected to grow by 1.4% in the EU in 2026, edging up to 1.5% in 2027, and by 1.2% in the euro area in 2026 and 1.4% in 2027.59 When it comes to trade, Europe is aiming to manage relations with both the US and China.60 European exports rose by 2% in the third quarter of 2025, slightly below the global average, while imports increased by 1%.61 Meanwhile, a widely anticipated EU–Mercosur trade deal hangs in the balance.62 Political fragility, demographic change and the costs of war further cloud the outlook. Germany’s recent forecasts were revised slightly downwards and projected growth of 1% in 2026 after just 0.1% in 2025, while France faced government disruptions and budget votes that widened spreads and delayed reforms.63 At the same time, the Russia–Ukraine conflict is pushing defence and reconstruction bills higher, including a recent agreement to lend Ukraine €90 billion.64 In the year ahead, almost two- thirds of chief economists surveyed (65%) expect looser fiscal policy in Europe (down from 74% in September 2025). Despite strong stock market performances, downbeat sentiment reflects deeper worries about productivity, demographics and policy capacity as well as Europe’s ability to compete in the technologies that will drive future growth, particularly AI.65 Only 42% of chief economists surveyed expect a significant direct impact of AI-related investments on growth, a substantially smaller share than for the US and China. Inflation in Europe is expected to remain low (44%) or moderate (50%). This is a minor increase compared to the previous edition. Annual inflation remained unchanged at 2.1% in November, and in December, the ECB kept the central bank policy rate at 2% for the fourth consecutive meeting.66 Against this backdrop, expectations for monetary policy have become more cautious, with 37% of respondents anticipating looser policy in the year ahead (down from 44% in September 2025), while 63% expect no change. Figure 13: Inflation Looking at the year ahead, what is your expectation for inflation in the following geographies? Very low Low Moderate High Very high United States 56 44 Sub-Saharan Africa 11 64 25 Latin America and the Caribbean 13 68 19 Middle East and North Africa 14 75 11 Central Asia 14 79 7 Europe 44 50 6 South Asia 28 69 3 East Asia and the Pacific 41 56 3 China 42 33 24 Share of respondents (%) Source: Chief Economists Survey. (November 2025). Chief Economists’ Outlook January 17