IMF Regional Economic Outlook 2025: Europe Growing Slowly at ~1.2% in 2025 as Reform Needs Mount
SDG 8: Decent Work & Economic Growth | SDG 10: Reduced Inequalities
Institution: Ministry of Finance | NITI Aayog | Reserve Bank of India
The International Monetary Fund’s Regional Economic Outlook for Europe, October 2025 projects that Europe’s economy will grow by about 1.2 % in 2025, easing slightly in 2026. Growth remains positive but modest, as high public debt, an ageing workforce, and weak investment continue to hold the region back. Inflation is coming down, but slowly, and many governments have little room to spend more without adding to debt.
The IMF points out that Europe’s deeper challenge is low productivity and slow reform progress. Factors such as expensive energy, tight labour markets, and heavy regulation are preventing stronger recovery. The report estimates that even small reforms, like lowering electricity costs, improving labour mobility, and simplifying business rules, could lift Europe’s GDP by up to 3 % over the next decade.
Europe’s experience highlights what can happen when recovery is steady but not transformative. For India, it is a reminder that keeping growth strong will depend on continued reforms by supporting innovation, improving productivity, and managing public finances responsibly through the Ministry of Finance, Reserve Bank of India, and institutions like NITI Aayog.
Follow the full report here: IMF Regional Economic Outlook – Europe, Oct 2025