2021.07.2315:12:00UTC+00ECB Survey Shows Professional Forecasters Raised Inflation & Growth Outlook

Professional forecasts raised their inflation and growth projections for the euro area, results of a quarterly survey by the European Central Bank showed Friday. The ECB Survey of Professional Forecasters for the third quarter showed that HICP inflation expectation for this year was raised to 1.9 percent from 1.6 percent in the previous round. The projection for next year was lifted to 1.5 percent from 1.3 percent. The outlook for 2023 was retained at 1.5 percent. The longer term inflation expectation, which refers to 2026, was 1.8 percent versus 1.7 percent for 2025 in the second quarter survey. The projection for core inflation, which excludes energy, food, alcohol and tobacco, for this year was raised to 1.2 percent from 1.1 percent. The outlook for next year was lifted to 1.3 percent and that for the year after was revised up to 1.5 percent. Longer term expectations for core inflation was 1.7 percent for 2026 versus 1.6 percent for 2025 in the previous survey. "Respondents once again confirmed that they considered some of the factors behind the expected increase in inflation in 2021 to be temporary but believed that underlying inflation pressure would gradually rise as economic activity recovers," the ECB said. The Eurozone economic growth forecast for this year was raised to 4.7 percent from 4.2 percent. The outlook for next year was increased to 4.6 percent from 4.1 percent. The projection for 2023 was lifted to 2.1 percent from 1.9 percent. "These expectations imply that economic activity will surpass its pre-pandemic level, which is the fourth quarter of 2019, in the fourth quarter of 2021, one quarter earlier than previously expected," the bank said. For 2026, the longer term growth expectation was 1.4 percent, same as that for 2025 in the previous survey. The unemployment rate forecast for this year was lowered to 8.1 percent from 8.5 percent. The projection for next year was cut to 7.8 percent from 8.1 percent. The outlook for 2023 was lowered to 7.5 percent from 7.7 percent. The longer term expectation for unemployment was 7.2 percent for 2026 versus 7.4 percent for 2025 in the previous round.