Regional Economic Outlook for Europe, April 2025

Regional Economic Outlook, April 2025

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The global economy is undergoing substantial changes, driven by fundamental shifts in trade policies.
These changes occur amid deep structural transformations related to aging populations, high energy costs, and technological change.
Europe’s economy is affected as it has only now begun to recover from recent shocks, its public spending needs are rising, public debt is high, and medium-term growth prospects are weak.
The April 2025 outlook presents:
- a downgrade in growth rates for the region,
- a faster approach of inflation to targets.
Risks to the outlook are to the downside and relate to a worsening of trade disputes and uncertainty.

Growth: Region-wide growth forecasts have been revised downward in the April 2025 outlook.
Inflation: Inflation is projected to approach targets faster than previously expected.
Structural pressures: Aging populations, high energy costs, and technological change are deep structural forces shaping prospects.
Fiscal stance: Public spending needs are rising while public debt remains high, constraining policy space.

Downside risks dominate the outlook.
A worsening of trade disputes and elevated uncertainty could further weaken growth prospects and amplify volatility.

Preserve openness: Prioritize the preservation of openness to trade and integration.
Manage shocks: Manage the impact of policy shocks and market volatility through balanced macroeconomic policies.
Single market completion: Complete the single market to boost resilience and integration.
National growth reforms: Address national growth reforms to strengthen medium-term prospects.

The potential benefits of pursuing these priorities—preserving openness, balanced macro policy, single market completion, and national reforms—could be substantial for Europe’s growth and resilience.

Regional Economic Outlook for Europe, April 2025 — International Monetary Fund