Will the European economy be better in 2026? It looks like it will— but just a little better.

Germany's fiscal expansion, the easing of global trade wars, and consumers still willing to spend—these factors combined could push the Eurozone's Q4 2026 growth rate to 1.4%, up from 1.3% in the same period in 2025. The problem is, this improvement is too small.

The real trouble comes from the trade front. Increased export competition, especially from the East, is reshaping the economic outlooks of European countries. The data speaks: over four years until 2029, Germany's real GDP will be impacted by a 0.9% decline, the most severe damage in Europe. Italy follows, with a 0.6% loss. France and Spain are relatively better off, with impacts of only 0.4% each.

Structural issues are not so easy to solve, and short-term fiscal stimulus cannot make up for them. That’s why, even with a relatively optimistic outlook, Europe's growth potential remains limited.