The International Monetary Fund has published the latest edition of its World Economic Outlook Update, in which it forecasts a 1.3% increase in real GDP for the euro area in 2026, followed by a 1.4% increase in 2027.
This follows a 1.4% increase in real GDP recorded in the euro area last year.
In terms of Europe‘s largest economies, meanwhile, Germany, which saw a 0.2% increase in GDP last year, is forecast to report a 1.1% increase this year, and a 1.5% rise in 2027, while France, which saw GDP rise 0.8% in 2025, is expected to post a 1.0% increase in 2026 and a 1.2% increase in 2027.
Italy, which reported a 0.5% increase last year, is forecast to post a 0.7% increase in both 2026 and 2027, while Spain, which outperformed its neighbours with a 2.9% increase in GDP last year, will see growth taper off to 2.3% in 2026 and 1.9% in 2027, the data showed.
Real GDP growth
At a global level, real GDP growth came in at 3.3% last year, and a similar percentage (3.3%) is expected for 2026, before a slight tapering off to 3.2% in 2027.
This forecasts represents a slight upward revision compared with the IMF’s October 2025 projections, with ‘technology investment, fiscal and monetary support, accommodative financial conditions, and private sector adaptability’ offsetting trade policy shifts, the Fund noted.
Global inflation is expected to fall this year, however US inflation will return to its target level more gradually.
‘Key downside risks are reevaluation of technology expectations and escalation of geopolitical tensions,’ it said. ‘Policymakers should restore fiscal buffers, preserve price and financial stability, reduce uncertainty, and implement structural reforms.’
The US is set to report 2.4% real GDP growth in 2026, with Canada reporting 1.6% growth, the UK reporting 1.3% growth, China reporting 4.5% growth and India seeing 6.4% growth, the IMF noted.
The full report, World Economic Outlook Update – Global Economy: Steady Amid Divergent Forces, can be found here.
