Goldman Sachs has downgraded its forecast for euro zone GDP growth in 2025

Economists at investment bank Goldman Sachs have lowered their forecast for eurozone GDP growth in 2025 to 0.8% from 1.1%, CNN reports.

Expectations for the eurozone’s economic growth in 2026 have been lowered to 1% compared to the previous forecast of 1.1%.

Goldman Sachs experts believe that the European economy will be affected by Donald Trump’s return to the White House, due to the likelihood of new trade tensions with the United States, pressure to increase defense spending, and a blow to business confidence due to higher geopolitical risks.

The UK economy, according to the new forecast, will grow by 1.4% next year (previous expectations were 1.6%). Germany’s GDP is expected to grow by only 0.5% in 2025 (previously forecasted at 0.9%).

At the same time, the multinational private bank Berenberg predicts a smaller blow to the eurozone’s GDP, downgrading its growth forecast by only 0.1 percentage points to 1%. As noted, the temporary effect of increased domestic demand in the United States and a stronger dollar, which makes European exports relatively cheaper, partially offset the impact of tariffs and trade tensions.

“For European businesses, Trump’s return to the White House means significant risks in trade policy and geopolitical uncertainty,” said Holger Schmieding, chief economist at Berenberg.

As GMK Center reported earlier, in September, the Organization for Economic Cooperation and Development forecasted global GDP growth of 3.2% yoy in 2024 and 2025. The OECD expected the eurozone economy to grow by 0.7% this year and by 1.3% – in 2025.