A whirlwind of macroeconomic forces has been at play in 2025, with political turmoil and shifting monetary policy keeping analysts on their toes. After a post-pandemic boom in 2021 and a subsequent slowdown, this year has been marked by trade wars, tariff threats, and falling interest rates.
Forces like artificial intelligence and improved financial conditions are set to boost global growth in the coming years, according to the OECD. Even so, risks to output remain — including the weakening of labour markets. Growth estimates also vary widely between countries as the global order shifts, with changes notably linked to tech developments and resource dominance — among other factors.
OECD forecasts suggest that real GDP growth in the eurozone is projected to lag behind the world’s two largest economies, the US and China, in 2025. But what lies ahead for 2026 and 2027? And how are individual nations faring within the eurozone?
Growth in 2025: Finland lags behind
By the end of 2025, Ireland is projected to record the strongest growth when compared with other OECD countries, at 10.2%. This surge is “driven by front-loaded pharmaceutical exports ahead of US tariffs” according to the OECD Economic Outlook report, published in December 2025.
After a series of threats earlier this year, US President Donald Trump announced tariffs of up to 100% on imported pharmaceuticals starting 1 October. Trump said exemptions will be given to companies building an American production facility. The EU has nonetheless claimed that its exports are protected under an earlier trade deal, setting US tariffs on the bloc’s goods at 15%.
Ireland stands as an outlier in the OECD’s ranking, as the next fastest-growing countries are Turkey at 3.6% and Poland at 3.3%.
Even so, GDP in Ireland is often a misleading indicator because of the way the economy is structured. Due to the nation’s traditionally low corporate tax rates, Ireland is home to a large number of multinationals who book profits in the country, artificially distorting GDP.
At the other end of the OECD ranking, Finland is projected to show no growth in 2025. Weak consumer confidence and plummeting housing construction to correct oversupply have been heavily weighing on output, explained the OECD.
Next year: 1.2% growth in the eurozone
Real GDP growth in the eurozone is projected to ease modestly from 1.3% in 2025 to 1.2% in 2026, before rising to 1.4% in 2027.
Increased trade frictions will be “offset by improved financial conditions, ongoing capital spending from Recovery and Resilience Facility (RRF) funds and resilient labour markets,” said the OECD.
RRF is the key instrument to help EU economies emerge stronger and more resilient from the pandemic. Under the RRF, the European Commission borrows on the capital markets by issuing bonds on behalf of the EU. The funds raised are then made available to member states to support major reforms and investments.
Three European economies are out in front
In 2026, among 27 European countries, real GDP growth is expected to range from 0.6% in Italy to 3.4% in Poland and Turkey. Lithuania follows at 3.1%. These three countries are the only ones forecast to exceed the global average of 2.9%.
At the lower end, Austria and Finland (both 0.9%) follow Italy. They are the only countries with growth below 1%.
Spain leads growth among top five economies
The OECD estimates that Spain will grow by 2.2% in 2026. This is the highest rate among Europe’s top five economies, far ahead of the next nearest, the UK, at 1.2%.
“[In Spain,] strong job creation and real wage growth will continue to support private consumption. Investment growth will be underpinned by ongoing implementation of the Recovery, Transformation and Resilience Plan (RTRP) and lower financing costs,” the report said.
Spain’s direct exposure to US tariffs is limited, since goods exports to the United States account for only 1.1% of its GDP.
In the UK, meanwhile, government spending limits and uncertainty will also weigh on the pace of expansion. The labour market is cooling, with the number of payrolled employees falling by about 0.4% in the year to September, and the number of vacancies declining by almost 14% over the same period.
Germany and France are projected to grow by 1%, while Italy has the lowest rate at 0.6%.
“Fiscal expansion is anticipated to boost economic activity in Germany, reflecting higher spending on defence and infrastructure, but expected consolidation in both France and Italy will dampen growth,” the OECD report found.
Top five economies in 2027
In 2027, Spain will again record the highest real GDP growth among the top five economies, although its rate will ease to 1.8%. Germany is set to accelerate from 1% to 1.5%. The UK and Italy will see only a 0.1-point increase compared with 2026, while France will remain unchanged at 1%.
The OECD projects that Turkey will have the highest growth in 2027 among 27 European countries at 4%. According to the organisation, higher tariffs will weaken exports, but the impact is expected to be relatively small and short-lived. Improved financial conditions will support private consumption and investment in 2026 and 2027, which will in turn boost imports. The decline in inflation is also expected to continue.
Gradual recovery in Finland
After a recession in 2025, Finland will see a noticeable improvement with GDP growth of 0.9% in 2026 and 1.7% in 2027.
“Lower interest rates, a stabilising housing market, rising defence spending and stronger trading partner growth will support the rebound,” the report said. However, US tariffs, global insecurity, and fiscal consolidation remain headwinds.
