European Union officials are expected to cut growth forecasts for 2026 due to trade threats and higher tariffs imposed by the US. The fallout for 2025 was less severe than expected, with a predicted 0.9% increase in GDP for the euro area. However, the outlook for 2026 is now uncertain, with challenges in Germany and France.

In Germany, despite a spending binge on defense and infrastructure, growth is not as strong as anticipated. Germany’s Council of Economic Experts has lowered its outlook for 2026 to below 1%. In France, political instability is impacting growth, with uncertainty shaving about 0.5 percentage point off expansion.

Italy is showing positive signs, with a lower deficit than expected and potential upgrade from Moody’s Ratings. In the euro area, GDP growth is forecasted to remain below trend in the final quarter of 2025 at 0.1%. Meanwhile, Japan may experience a GDP contraction, UK inflation is slowing, and US jobs numbers are awaited.

Switzerland’s GDP may have shrunk in the third quarter due to tariffs imposed by the US. In the UK, inflation is expected to weaken. Europe, Middle East, and Africa regions are anticipating monetary decisions, with Hungary, Angola, South Africa, and Egypt expected to adjust interest rates.

Brazil faces underwhelming GDP readings with a possibility of a technical recession. Central banks in Uruguay, Paraguay, and Mexico are meeting to discuss monetary policy. Mexico’s Banxico recently cut rates to 7.25% and may see further adjustments in the future. Third-quarter output reports are expected from major Latin American economies.

Read more at Yahoo Finance: Europe Gauges Fallout From Trump’s Year of Trade Chaos