The European Central Bank (ECB) published, on Friday 5 May, the results of the ECB Survey of Professional Forecasters for the second half of 2023 (SPF). Their projections reflect some recent developments, such as the decline in energy prices.
The 58 respondents expectations of overall HICP inflation have been revised significantly from the previous survey, which was conducted in February.
Their projections are down for 2023 (5.6%, down from 5.9%) and 2024 (2.6%, down from 2.7%), reflecting the easing of inflationary pressures on energy prices.
For 2025, forecasters have revised their forecasts slightly upwards (2.2%, compared to 2.1%).
Their long-term forecast remains unchanged at 2.1%.
Forecasters’ expectations for core inflation (HICP excluding food and energy, alcohol and tobacco) in 2023 have been revised upwards from the previous survey, with core inflation for 2023 now expected to be 4.9%, up from 4.4%. The forecast remains unchanged for the medium and short term.
Respondents believe that changes in profit margins have had a greater influence on underlying inflation until recently. In contrast, respondents say that wage developments will play a more important role in the future.
As far as growth (real gross domestic product) is concerned, respondents are more confident in the short term. The forecasters are more optimistic than in the previous survey of 2023 (0.6% instead of 0.2%), mainly due to the postponement of the best growth performance to the end of 2022.
Respondents also mention the beneficial effect on short-term confidence of two elements: the satisfactory results of the fight against the energy crisis and the stabilising effect of fiscal policy in the euro area.
However, in the medium term, growth projections are down for 2024 (1.2%, down from 1.4%) and 2025 (1.6%, down from 1.7%). This reflects, according to the ECB, the recent tensions in financial markets and the tightening of financing conditions.
Respondents also anticipate further restrictive monetary policy measures by the ECB.
The shadow of a possible mild recession in the US at the end of 2023 and the consequences of Russian military aggression against Ukraine also weigh on growth forecasts, especially in the medium term.
The long-term forecast remains unchanged, with growth estimated at 1.4%.
On the employment front, respondents are more optimistic and revise their unemployment forecasts slightly downwards compared to the previous survey for 2023 (6.8%, down from 7%), 2024 (6.8%, down from 6.9%) and 2025 (6.6%, down from 6.7%). In the long term, the outlook is revised upwards very slightly (6.5%, from 6.4%).
Finally, forecasters expect the interest rate on the ECB’s main refinancing operations to rise to 3.75% in the second quarter of 2023, to 4.0% in the third quarter and for the whole of 2023 and to fall to 3.0% in 2025.
Link to the survey: https://aeur.eu/f/6qf (Original version in French by Émilie Vanderhulst)