Eurozone Growth Forecasts: Ireland Leads as Finland Struggles

The eurozone is poised for significant economic shifts as it emerges from a challenging period marked by inflation and tight monetary policies. According to the OECD, growth forecasts for the coming years indicate that Ireland will experience the highest growth rate among European economies, while Finland is expected to face stagnation.

Economic recovery has been a focal point for many European nations following the disruptions caused by the pandemic. In 2025, Ireland is projected to achieve an impressive 10.2% growth rate, driven primarily by increased pharmaceutical exports ahead of anticipated US tariffs. This growth comes despite a backdrop of trade tensions and fluctuating economic conditions across the continent.

US President Donald Trump announced tariffs of up to 100% on imported pharmaceuticals, effective October 1, 2025. Although the EU argues that its exports are safeguarded under a prior trade agreement limiting tariffs to 15%, the impending tariffs have prompted Irish companies to accelerate exports to the US market.

In contrast, Finland is expected to struggle, with projected GDP growth remaining stagnant at 0% in 2025. The OECD attributes this to declining consumer confidence and a downturn in housing construction, which has been correcting an oversupply issue in the market.

Growth Projections for the Eurozone

Looking ahead, the eurozone’s GDP growth is anticipated to ease slightly from 1.3% in 2025 to 1.2% in 2026, before rising to 1.4% in 2027. The OECD notes that ongoing capital spending from the Recovery and Resilience Facility (RRF) will help offset increased trade frictions. The RRF is designed to bolster EU economies’ resilience in the wake of the pandemic by providing funding for essential reforms and investments.

The OECD forecasts that three countries—Turkey, Poland, and Lithuania—will stand out in 2026, with expected growth rates of 3.6%, 3.3%, and 3.1%, respectively. These nations are projected to surpass the global average growth rate of 2.9%. Meanwhile, Italy is expected to lag behind at 0.6%, with Austria and Finland close behind at 0.9% each.

Spain is set to record the highest growth among the top five European economies, with an anticipated rate of 2.2% in 2026. The country benefits from strong job creation and real wage growth, which are expected to stimulate private consumption. Investment growth will be supported by the implementation of Spain’s Recovery, Transformation and Resilience Plan (RTRP) and lower financing costs. With minimal direct exposure to US tariffs, Spain’s economy appears well-positioned for growth.

Long-term Expectations and Challenges

By 2027, Spain is projected to maintain its status as the fastest-growing major economy in Europe, although its growth rate is expected to moderate to 1.8%. Germany’s growth is likely to accelerate from 1% to 1.5%, while the UK and Italy will see negligible increases. France is expected to remain stable at 1%.

The OECD predicts that Turkey will lead all European nations with a growth rate of 4% in 2027, despite potential adverse effects from higher tariffs. Improved financial conditions are expected to bolster private consumption and investment during this period.

Finland’s economic outlook shows signs of improvement following a recession in 2025, with forecasts of 0.9% growth in 2026 and 1.7% in 2027. Factors contributing to this recovery include lower interest rates, a stabilizing housing market, and increased defence spending.

While the eurozone faces a complex mix of opportunities and challenges, the outlook for individual nations varies significantly. The next few years will be crucial in determining how these economies adapt to shifting global dynamics and internal pressures.