Real GDP Growth in Europe: Which Countries Grew the Most in 2025?
Spain recorded the highest economic growth among the largest European economies in 2025, while Germany showed the weakest performance. Euronews Business reviewed the latest data and spoke with experts to understand what is driving these trends.
In 2025, the European Union’s real gross domestic product (GDP) grew by 1.5%. This is an improvement compared to 1.1% growth in 2024, according to Eurostat. Real GDP measures economic growth after removing the effect of inflation, giving a clearer picture of how economies are performing.
So, which countries grew the most, and why are there big differences across Europe?
Ireland stands out with a very high growth rate of 12.3%. However, experts say this number does not reflect the real situation of the local economy. Instead, it is mainly due to the activities of large multinational companies based in the country.
Jacob Funk Kirkegaard, a senior fellow at Bruegel, explained that Ireland’s GDP growth is heavily influenced by accounting practices of mostly US-based multinational companies. These companies often record their global profits in Ireland, which makes the country’s GDP appear much larger than its actual economic activity.
Apart from Ireland, other strong performers include Malta and Cyprus, which recorded growth rates of 4% and 3.8% respectively. These smaller island economies have benefited from strong tourism and service sectors.
Several Eastern and Southeastern European countries also showed solid growth. North Macedonia grew by 3.5%, Croatia by 3.2%, and Bulgaria by 3.1%. These countries are still developing compared to Western Europe, and it is common for such economies to grow faster.
Miguel León-Ledesma from the University of Exeter explained that poorer countries often grow faster because they are catching up. They invest more, adopt new technologies, and improve their industries, which helps boost economic growth.
When looking at the EU’s four largest economies—Spain, Germany, Italy, and France—the differences are clear. Spain had the highest growth at 2.8%, while Germany recorded only 0.2%, making it one of the weakest performers in Europe. Finland also had the same low growth rate as Germany.
Italy’s growth was slightly better at 0.5%, while France saw moderate growth of 0.8%. These figures show that large economies in Europe are facing different challenges.
One major factor affecting growth is what experts call the “second China shock.” This refers to the rapid increase in Chinese exports around the world. As China exports more goods at competitive prices, European countries that depend on exports are facing stronger competition.
Germany, in particular, has been affected by this trend. As one of Europe’s biggest exporters, especially in manufacturing, Germany is struggling to compete with rising Chinese exports. Italy and some northern European countries are also feeling similar pressure.
Kirkegaard noted that Germany’s weak performance in recent years is very different from its strong position a decade ago. Back then, it was one of the leading economies in Europe, but now it is lagging behind.
Spain, on the other hand, has been less affected by global trade pressures. Its economy is more focused on services like tourism, which has helped support growth. In addition, Spain has followed a more open immigration policy, which has increased its population and workforce.
A growing population can boost economic activity because more people are working, spending, and contributing to the economy. This has been an important factor in Spain’s recent growth.
However, experts warn that strong GDP growth does not always mean people are better off. Much of Spain’s growth has come from job creation rather than improvements in productivity.
Productivity measures how much output each worker produces. In some large European economies, productivity has remained flat, which means workers are not producing significantly more than before. As a result, wages may also remain unchanged.
In Spain, for example, output per worker actually fell by 0.3%, while output per hour worked increased by only 0.4%. This shows that even though the economy is growing, individual workers may not be seeing big benefits.
Another important point is that Spain’s population has increased due to migration. While this supports overall GDP growth, it can reduce GDP per person, which is a better measure of individual living standards.
Looking ahead, the Organisation for Economic Co-operation and Development (OECD) expects Spain’s economy to grow by 2.2% in 2026. This would again make it the fastest-growing economy among Europe’s five largest countries, well ahead of the United Kingdom, which is expected to grow by 1.2%.
Tourism has also played a key role in Spain’s economic success. Many Mediterranean countries, including Italy, have benefited from a strong recovery in tourism after the pandemic.
Italy has also gained support from the EU’s NextGenerationEU recovery fund, which was created to help member states rebuild their economies after COVID-19. However, Italy is still affected by global trade challenges, especially competition from China.
France, despite facing political uncertainty, has shown resilience. Its economy has managed to grow steadily, even in a challenging environment.
In Northern Europe, growth rates have been mixed. Denmark performed well with 2.9% growth, while Sweden matched the EU average at 1.5%. Iceland and Norway recorded lower growth rates of 1.3% and 1.1%, respectively. Finland was among the weakest performers.
Finally, it is important to understand that GDP growth does not always reflect how households are doing financially. A country’s economy can grow, but individual incomes may not increase at the same rate.
Kirkegaard pointed out that Spain’s growth is partly driven by population increase. While the overall economy is expanding, this does not necessarily mean that people are earning more.
In some cases, people may feel little improvement in their daily lives, even if national economic figures look strong. This highlights the difference between overall economic growth and personal financial well-being.
In conclusion, Europe’s economic performance in 2025 shows a wide gap between countries. While some nations are growing quickly due to investment, tourism, or population growth, others are struggling with global competition and slow productivity.
Understanding these differences is important for policymakers as they work to create balanced and sustainable growth across the region.
Also Read:
Chocolate prices soar worldwide; biggest increases by region
Oil Prices as Trump pushes allies to secure Hormuz Strait now
Portugal’s Food Basket Cost at All-Time High — But Not Due