IMF cuts Eurozone 2026 growth forecast, urges tighter ECB policy

The International Monetary Fund reduced its projected gross domestic product growth for the Eurozone in 2026, lowering the estimate to around 1.1% from earlier forecasts of 1.4% (and to 0.9% in a separate update). The fund kept its 2027 outlook at roughly 1.2% growth. It attributes the slowdown primarily to the economic fallout from the Iran–Israel conflict, which has disrupted oil supplies and pushed oil prices up by about 19% in 2026. The IMF expects inflation to run at 2.8% in 2026 and 2.3% in 2027, and advises the European Central Bank to adopt a more restrictive monetary stance with forward‑looking communication. It also lowered the global growth forecast for 2026 to 3.1% from 3.3%. The weaker Eurozone outlook puts pressure on Germany, the bloc’s largest economy, and has spill‑over effects on neighboring economies such as Switzerland and Liechtenstein through reduced export demand.