Rising energy prices are also set to push inflation to 3.1 percent, up by a full percentage point from the fall forecast.
The effects of the energy shock are set to extend into 2027, with growth estimated at 1.4 percent next year.
“This confirms the negative implications of the war in the Middle East on the economy that has led to an economic slowdown,” Dombrovskis said.
The EU’s three largest economies — Germany, France and Italy — are set to grow at 0.6 percent, 0.8 percent and 0.5 percent respectively this year, significantly below the EU average.
The setback comes after years of dismal growth and continuous economic shocks in Europe, from the Russian war in Ukraine to trade tensions with the U.S.
European economies are now grappling with the effects of the closure of the Strait of Hormuz, which has sparked a surge in energy prices for businesses and households.