(Bloomberg) — European Union officials may cut growth forecasts for 2026 in the coming week in an assessment of damage to the region’s economy, a year after Donald Trump won back the White House.
The outlook to be released in Brussels on Monday will point to the cumulative impact of trade threats and higher tariffs imposed by the US, along with the challenges of persistent weakness in Germany and political turmoil in France.
Forecasts released in May were already downbeat in the wake of President Trump’s market-jolting “Liberation Day” announcement of levies the previous month, followed by a climbdown as he suspended action to pursue deals. In their own accord with the US clinched in July, Brussels officials ended up swallowing 15% tariffs on most EU goods.
The fallout for 2025 has ended up being less severe than feared. The European Commission earlier predicted a 0.9% increase for gross domestic product in the euro area, and it’s likely to raise that estimate this time around.
For 2026, though, hopes of a mild pickup to the 1.4% predicted in May are now looking unlikely, with the European Central Bank having anticipated 1% growth in its last forecasting round in September.
Describing the challenges for the current quarter, Frankfurt officials said at their last meeting that “still-elevated uncertainty, higher effective tariffs, a stronger euro and increased global competition are expected to hold back growth.”
Trade uncertainty is just one part of the story. Despite a spending binge on defense and infrastructure in Europe’s biggest economy, what could have been Germany’s first meaningful year of growth since the aftermath of the pandemic is now looking less impressive. The government’s Council of Economic Experts has lowered its outlook for expansion in 2026 to below 1%.
In France, Europe’s No. 2 economy, political instability is an ongoing challenge. While growth there is proving resilient, uncertainty is shaving about 0.5 percentage point off expansion, with domestic political and budget turbulence accounting for at least 0.2 point of that, according to the Bank of France.
France is likely to own the region’s worst deficit in the EU’s outlook for public finances. One bright spot is Italy, which has brought its own shortfall down to the bloc’s 3% ceiling faster than anticipated, and may even get an upgrade from Moody’s Ratings on Friday.
What Bloomberg Economics Says:
“We forecast euro-area GDP growth to remain below trend in the final quarter of 2025 at 0.1%. The economy may experience another period of soft business investment and weak external demand as a result of elevated uncertainty and fewer purchases from the other side of the Atlantic.”
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Elsewhere, a possible contraction in Japanese GDP, slowing UK inflation, long-delayed US jobs numbers and possible interest rate cuts from Egypt to South Africa may be among the highlights.
Click here for what happened in the past week, and below is our wrap of what’s coming up in the global economy.
US and Canada
Investors and policymakers continue to wait on further updates to economic data calendars by official statistics agencies. The Bureau of Labor Statistics said it will release the September jobs report on Thursday; the Census Bureau announced it will move forward with reports on August construction spending, factory orders and the trade balance.
Government funding resumed days ago following the longest shutdown in US history, but agencies are running behind on most data collection for key October reports on employment and inflation. The process of catching up will likely stretch well into November on economic information that in any event is growing increasingly stale.
The dearth of official data helps explain recent comments by a number of Federal Reserve policymakers that they should hold the line on interest rates when the meet next month. The Fed on Wednesday will issue minutes of its October meeting.
Among upcoming private-sector data, figures from the National Association of Realtors on Thursday are projected to show little change in October sales of previously-owned homes. The report is expected to illustrate a housing market still challenged by limited affordability.
In Canada, data may show inflation above the central bank’s 2% target for October, even as officials expect the headline rate to average 2% in the fourth quarter. Policymakers have said rates are at “about the right level” as long as their economic and inflation forecasts play out, so there would need to be a significant downside surprise to move them off the sidelines at their Dec. 10 meeting.
Existing home sales and housing starts data will offer a look at Canada’s tepid real estate market, while retail data will shed light on how consumption is holding up amid the trade war with the US.
Prime Minister Mark Carney’s big-spending budget is expected to narrowly pass the House of Commons.
For more, read Bloomberg Economics’ full Week Ahead for the US Asia
The week begins with data that’s likely to show Japan’s economy shrank at an annualized pace of 2.4% in the three months through September, the first contraction since early 2024.
The figures will give Prime Minister Sanae Takaichi the impetus she needs to compile an outsized stimulus package, to be unveiled later this month.
On the same day, data from Bangkok are expected to show that Thailand’s economic growth slowed to 1.7% year on year in the third quarter, weighed down by sagging tourism numbers and US tariffs.
Among key inflation gauges, Japan releases consumer price figures forecast to show gains stayed at or above the central bank’s 2% target for a 43rd straight month in October, keeping authorities on the path toward rate hikes.
November purchasing managers index figures will likely show India’s manufacturing activity staying expansionary, while Japan’s may remain just below the boom-or-bust 50 reading.
Australia publishes wage data for the third quarter on Wednesday. Trade statistics are due during the week from Singapore, Japan, India, New Zealand, Taiwan, Thailand and Malaysia. New Zealand reports food price data for October.
On the policy front, Bank Indonesia meets on Wednesday to decide whether to resume its easing cycle after holding in October. Last month’s inflation data came in hot, so authorities may stand pat again, with Governor Perry Warjiyo likely to signal room for further cuts in the coming year.
The Reserve Bank of Australia on Tuesday releases minutes from its November meeting, where it signaled an extended pause after leaving the cash rate at 3.6%. China will likely hold its 1- and 5-year loan prime rates steady on Thursday.
For more, read Bloomberg Economics’ full Week Ahead for Asia Europe, Middle East, Africa
Switzerland takes center stage after a momentous week for the country that featured both a belated US trade deal and a surge in the franc to a decade-high against the euro.
GDP data on Monday may reveal the economy shrank during the third quarter for the first time in more than two years, as exporters reeled from Trump’s earlier move to inflict tariffs of 39% on Swiss goods. Trade data come on Thursday, while central bank President Martin Schlegel speaks on monetary policy the following day.
In the UK, inflation on Wednesday is anticipated to show weakening to a five-month low of 3.5%, a result that might validate the Bank of England’s view that price pressures have peaked. Amid investor jitters and speculation on Chancellor Rachel Reeves’s Nov. 26 budget, the final public-finance data before that announcement comes on Friday.
Appearances by BOE officials Catherine Mann, Swati Dhingra and chief economist Huw Pill are also on the calendar.
Similarly, in the euro zone, several European Central Bank speakers are scheduled, including Vice President Luis de Guindos and chief economist Philip Lane on Monday, and President Christine Lagarde and Bundesbank chief Joachim Nagel on Friday.
Among the data highlights will be the flash readings of PMI numbers, and negotiated wages, both on Friday.
For more, read Bloomberg Economics’ full Week Ahead for EMEA Some monetary decisions are on the diary in the wider region:
Hungary is poised to keep its rate at an EU high of 6.5% on Tuesday, at a time when Prime Minister Viktor Orban is moving to loosen the budget before elections and with inflation stuck outside policymakers’ tolerance band. Also on Tuesday, Angola’s central bank may cut its benchmark — now at 19% — to bolster the economy as price growth continues to ease. The South African Reserve Bank is expected to resume its easing cycle on Thursday with a 25-basis-point reduction to 6.75%, after the National Treasury formally backed its new 3% inflation target. Egypt is also anticipated to lower its benchmark rate on Thursday, to 20% from 21%. Policymakers will still have to weigh a surprise jump in rents last month that caused inflation to accelerate for the first time since May. Latin America
Underwhelming GDP-proxy readings over the last four months in Brazil may have extended into the end of the third quarter as tight financial conditions and slower public spending weigh on demand.
Brazil’s 16 straight quarters of growth — the best run for Latin America’s No. 1 economy in more than two decades — appears about to end. Some analysts see the possibility of a technical recession in the second half of 2025.
On the monetary policy front, inflation-targeting central banks in two of the region’s smaller economies — Uruguay and Paraguay — meet in the coming week, while Mexico’s posts the minutes of its last meeting.
Banxico on Nov. 6 delivered its 11th straight rate cut, reducing borrowing costs to 7.25%, while shortening its guidance horizon to its next meeting.
A shift in language — removing “further adjustments” for “evaluate reducing the reference rate” — suggested to many analysts that the board is nearing a pause, though Governor Victoria Rodriguez Ceja does see a quarter-point cut to 7% next month as “highly likely.”
Third-quarter output reports are due from four of LatAm’s major economies. Mexico’s final data will all but certainly confirm negatives for both the quarter-on-quarter and year-on-year prints as headwinds abound.
Chile’s readings will likely dip, due largely to an accident that temporarily halted output at a major mine in the world’s top copper-producing nation.
By contrast, analysts see the economies of Peru and Colombia tuning out not insignificant bouts of political noise to actually accelerate in the third quarter.
For more, read Bloomberg Economics’ full Week Ahead for Latin America –With assistance from Brian Fowler, Laura Dhillon Kane, Vince Golle, Monique Vanek, Robert Jameson, Mark Evans, Piotr Skolimowski and Carla Canivete.
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