Europe’s economy is growing, but just barely. The European Commission expects around 1% growth in 2025 as high interest rates, weak exports, and global trade tensions slow things down. Inflation has finally dropped to about 2%, hitting the European Central Bank’s target, which is a positive sign after years of price spikes. Still, a stronger euro and new U.S. tariffs are hurting Europe’s exporters, especially in Germany and Italy. On the bright side, unemployment remains low, and wages are rising slightly. But long-term challenges like an aging population, low productivity, and the impact of climate change are weighing on the region’s future. This summer’s heat waves and droughts, for example, caused major agricultural and energy losses. Overall, Europe’s economy is stable but stuck in low gear. Inflation is under control, but growth and investment need a boost if the region wants to move from recovery to real progress.
