Limited progress has been made by the non-euro area Member States of the European Union (EU) on economic convergence with the euro area since 2024, according to the 2026 Convergence Report of the European Central Bank (ECB) published today. A key factor holding back economic convergence is the economic impact of external shocks, including Russia’s war against Ukraine, global trade tensions and the outbreak of the war in the Middle East.
Despite these external challenges, economic activity in the countries under review has shown resilience, but the pace of growth has differed across countries. Looking ahead, the economic outlook is clouded by heightened geopolitical tensions. The war in the Middle East has contributed to greater volatility in global energy markets and rising energy costs, compounding the uncertainty about economic prospects. These developments have already had visible effects on inflation and economic sentiment, and may weigh on output growth in the future. While the degree of sensitivity and direct exposure of these economies to energy shocks has subsided over time and is currently lower than in 2022, the medium-term economic implications will depend on the intensity and duration of the present energy shock, as well as the scale of its indirect and second-round effects.
As regards the price stability criterion, three of the five countries under review recorded a 12-month average inflation rate above the reference value of 2.7%. Inflation was considerably above the reference value in Romania and above it, albeit to a lesser extent, in Hungary and Poland. In the Czech Republic and Sweden, inflation was below the reference value (Chart 1). The reference value is based on the three best-performing Member States over the past 12 months, i.e. Cyprus (0.9%), France (1.2%) and Denmark (1.6%), taking their average inflation rates over the past 12 months and adding 1½ percentage points. None of the Member States was identified as an outlier for exclusion from the calculation of the reference value.
