“The risks to economic growth have become more balanced, as the likelihood of negative risks related to tariffs has decreased, thanks to the new trade agreement [between the EU and the United States]. However, risks persist that new trade tensions may affect exports, investment, and consumption,” Christine Lagarde warned.
In her regular hearing before the Committee on Economic and Monetary Affairs of the European Parliament, held on the sidelines of the institution’s plenary session in the French city of Strasbourg, the ECB president indicated that in recent months, the eurozone has faced “a period of greater uncertainty,” before the EU and the United States reached a trade agreement this summer for U.S. tariffs of 15% on European products.
Despite such consensus, “there is always a degree of uncertainty that is lingering or recurring,” the official admitted.
“The weak export performance — due to higher tariffs, a stronger euro, and the intensification of global competition — is expected to hold back growth for the remainder of the year, but the impact of these headwinds should diminish next year,” she added.
Additionally, according to Christine Lagarde, “geopolitical tensions continue to be a significant source of uncertainty.”
“Conversely, higher spending on defense and infrastructure, and reforms that increase productivity could boost growth,” she suggested.
For Christine Lagarde, this heightened political uncertainty is “a unique opportunity to strengthen the global role of the euro,” which would bring “tangible benefits” such as its increased use in trade billing, reduced transaction costs, and the protection of European prices against exchange rate volatility.
The ECB estimates that the eurozone economy will grow 1.2% in 2025, 1% in 2026, and 1.3% in 2027.
Regarding inflation, it has remained around 2%, the percentage defined by the central bank for price stability, but according to Christine Lagarde, “the disinflationary process has ended,” which will be considered in upcoming monetary policy meetings.
The ECB’s projections reveal that overall inflation is expected to average 2.1% in 2025, 1.7% in 2026, and 1.9% in 2027.
