ECB: Professional Forecasters See No Change in Medium-Term Inflation Outlook

23 April 2021

By David Barwick – FRANKFURT (Econostream) – Professional forecasters see medium-term inflation at the same level in 2Q as they had in 1Q, according to the European Central Bank’s survey, released Friday.

The survey of professional forecasters (SPF) for 2Q 2021 showed respondents to have revised up their expectations for 2021 a full 0.7 point to 1.6%, but to be unchanged in their views of inflation in both 2022 (1.3%) and 2023 (1.5%).

For all three years, survey participants’ expectations of HICP were 0.1 point above the most recent staff macroeconomic forecasts of the ECB. However, these were last updated in March and did not take into account the potential impact of the sizeable US fiscal stimulus since enacted.

Echoing the ECB’s narrative, ‘[r]espondents reported that they considered the factors behind the upward revision for 2021 to be largely temporary’, the ECB reported.

According to the survey, expectations for inflation in 2025 were unchanged versus 1Q at 1.7%.

As for growth, respondents were slightly less optimistic about the current year, predicting 4.2% and thus 0.2 point less than three months ago. They revised 2022 GDP growth up 0.4 point to 4.1% and left unchanged 2023 at 1.9% and the longer-term outlook (2025) at 1.4%.

The ECB is currently projecting GDP to grow at 4.0% this year, 4.1% next and 2.1% in 2023, also without the impact of the latest US stimulus plans.

The ECB said that SPF participants’ growth expectations implied that growth would exceed the 2019 level next year, but that ‘this would still be 2.6% lower than the level for 2022 implied in the survey round for the first quarter of 2020’.