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

• HICP inflation expectations revised up across all horizons
• Real GDP growth expectations revised down for the nearer term, but otherwise broadly stable
• Unemployment rate expectations revised down for all horizons

In the European Central Bank’s (ECB) Survey of Professional Forecasters (SPF) for the third quarter of 2022, respondents revised up their inflation expectations for all horizons. For 2022, 2023 and 2024, these stand at 7.3%, 3.6% and 2.1% respectively, 1.3, 1.2 and 0.2 percentage points higher compared with the previous survey round. According to respondents, the upward revisions mainly reflect higher energy and food prices, but also the stronger than expected pass-through of input cost increases. Longer-term inflation expectations (for 2027) stood at 2.2% on average, revised up by another 0.1 percentage point.

Real GDP growth expectations were revised down from the second quarter of 2022 onwards, as well as for 2023, but remained the same for 2024. Longer-term growth expectations were revised up marginally. Respondents noted that the stronger than expected outturn in the first quarter of 2022 largely offset the weaker dynamics expected for the other quarters. They report that the main factors contributing to this bleaker growth outlook include intensifying energy price pressures, the tightening of monetary policy around the world and the effect of inflation on the purchasing power of households. They noted that although the supply chain bottlenecks linked to the COVID-19 crisis have eased somewhat, they are still acting as a drag on the global economy. By contrast, fiscal measures against rising energy prices have cushioned the energy price shock to some extent, and the effects of the reopening of the economy have also played out positively.

Notwithstanding the downward revisions to expected GDP growth, unemployment rate expectations were again revised down for all horizons. Respondents expect the unemployment rate to decline from 6.7% in 2022 to 6.4% by 2027. Longer-term unemployment expectations are at their lowest level in the history of the ECB SPF, which started in 1999.