Blog Details

Supported by ECB hikes and AI investment – BNP Paribas


BNP Paribas projects Eurozone Gross Domestic Product (GDP) growth slowing from 1.5% in 2025 to 1.0% in 2026 and 1.3% in 2027, with inflation rebounding to 3.0% and 3.3%. Activity is seen withstanding the energy shock thanks to investment in defence, AI and electrification. The European Central Bank (ECB) is expected to deliver two 25 bp hikes in 2026, while EUR/USD is forecast at 1.21 by Q4 2026 and 1.25 by Q4 2027.

Eurozone growth slows but stays resilient

“Eurozone growth would slow due to spillovers from the Middle East conflict.”

“GDP growth, which reached 1.5% in 2025, would slow down to 1.0% in 2026 and 1.3% in 2027, while inflation would rebound to 3.0% in 2026 and 3.3% in 2027 (compared to 2.1% in 2025).”

“Activity would nevertheless withstand the energy shock, supported by investment in defence, AI, and electrification, which should continue to boost intra-EU trade.”

“As inflation rebounds, two 25-basis-point hikes in the ECB’s policy rate would take place in 2026 – with the first hike expected in June – pushing the deposit facility rate to 2.5%.”

“In our base-case scenario (gradual normalisation of the Middle East situation with persistent price tensions), we expect the USD depreciation against the EUR to resume, albeit very gradually, amid broader diversification away from the dollar.”

“We forecast EUR/USD to reach 1.21 by Q4 2026 and 1.25 by Q4 2027.”

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)



Source link

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.