The small ones race ahead and the big ones follow, out of breath. This is how one can describe the situation in the European Union, based on the latest estimates by Morningstar DBRS.
Greece is losing the title of “champion” of growth, but it remains in the club of those economies that continue to show a clearly more dynamic pace than the three major economies of the monetary union: Germany, France, Italy.
The rating agency sees growth rates of 2.1% this year, marginally lowering its estimates to 2% for 2026. The picture is similar in Portugal (2.1% in 2025 and 2% in 2026), while Spain is also close, which is expected to grow at rates of 2.5% this year and 1.8% next year. Ireland is expected to show better performance this year with growth of 3.7%, slowing down to 2.5% in 2026, while Poland’s growth will be extremely dynamic (3.5% and 3.6%).
Malta will be the champion with growth rates of 4% this year and 3.6% in 2026.
The once powerful Germany will barely avoid recession this year (growth of 0.3%). However, thanks to Friedrich Merz’s plans, it is expected to recover to 1.1% next year. France is struggling, with growth of just 0.7% this year and 1.1% in 2026, while Italy is also under pressure, with DBRS setting the bar at 0.6% this year and 0.9% next year.
As for the picture on the other side of the Atlantic, DBRS sees the US growing at 2% this year and 1.9% next year.
Central banks’ next moves
Overall, DBRS noted that the global growth outlook has deteriorated slightly, with labor markets remaining largely resilient. However, the stance of central banks is expected to change.
“The increased uncertainty around the US policy has affected some of our forecasts. However, the overall outlook has not significantly changed compared to our December estimates. Inflationary pressures have subsided, but central banks in North America and Europe appear to be more data-driven and may not proceed with significant additional cuts this year,” it warned.
In particular, “the Fed may delay any further cuts until the scope of tariffs and their impact on the economy and prices are clear,” it added.
