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Eurozone Growth Slows Amid Middle East Conflict and Weaker Consumption

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EUR
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BNP Paribas strategists are warning of a slowdown in Eurozone growth, predicting GDP will drop to 0.8% in 2026 from 1.5% in 2025 due to spillovers from the Middle East conflict and weaker consumption.

Inflation is expected to rebound to 2.7% in 2026, prompting one more 25-basis-point hike by the European Central Bank (ECB), pushing the deposit facility rate to 2.5%

Despite softer growth, BNP Paribas expects EUR/USD to rise gradually through 2027, reaching 1.20 by Q4 of that year.

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