Results of the ECB Survey of Professional Forecasters for the fourth quarter of 2022

• HICP inflation expectations revised up further for 2022-2024 horizons, but unchanged for the longer term
• Real GDP growth expectations revised down
• Unemployment rate expectations revised up

In the European Central Bank’s (ECB) Survey of Professional Forecasters (SPF) for the fourth quarter of 2022, respondents revised up further their inflation expectations for the 2022, 2023 and 2024 horizons. These now stand at 8.3%, 5.8% and 2.4% respectively; 1.0, 1.2 and 0.3 percentage points higher compared with the previous survey round. According to respondents, the upward revisions primarily reflect a combination of higher (non-oil) energy and food prices as well as their pass-through to other prices and higher forecast wage growth. Longer-term inflation expectations (for 2027) stood unchanged at 2.2% on average.

GDP growth expectations were revised down substantially for 2023. Respondents now expect activity to broadly stagnate in 2023 (0.1% growth) and expect growth to be negative between the third quarter of 2022 and the first quarter of 2023 with a cumulative decline of 0.7%. This is attributed to ongoing high energy price pressures, inflation affecting households’ purchasing power, a weaker global economy and tighter monetary policy. Longer-term growth expectations were revised down marginally to 1.4%.

Unemployment rate expectations were revised up for all horizons by between 0.1 and 0.4 percentage points. The profile for the future unemployment rate is hump-shaped with an increase to 7.1% expected in 2023 and a gradual decline thereafter to 6.6% by 2027.