The Organisation for Economic Co-operation and Development (OECD) forecasts that the eurozone economy will grow by 1 percent in both 2026 and 2027. The OECD is more optimistic about growth this year, but less optimistic about the economy’s performance in 2027.

The moderate growth is due to the recent rise in energy prices, along with higher interest rates putting pressure on economic activity, Executive Digest reports.

OECD believes these impacts will lessen as energy prices fall and new defence spending initiatives gain momentum.

The estimate for 2026 was revised upwards by 0.2 percentage points (pp), but the estimate for 2027 is 0.2 pp lower than the June forecasts.

Country forecasts

The countries forecast in the report all saw their estimates for this year revised upwards, with Germany at 1.1 percent, Italy at 0.9 percent, and Spain at 2.6 percent.

The OECD revised its projections for France downwards by 0.3 percentage points to 0.4 percent in 2026 and by 0.1 percentage points to 0.7 percent in 2027.

Inflation outlook

Regarding inflation, the OECD anticipates that the rate will remain high in the eurozone in the short term, attributed to the recent increase in gas prices, before receding slightly from 3 percent in 2026 to 2.9 percent in 2027.