ECB’s Survey of Professional Forecasters (SPF) for the Third Quarter of 2023: Inflation, GDP, and Unemployment Expectations

The European Central Bank’s Survey of Professional Forecasters (SPF) for the third quarter of 2023 revealed interesting insights into the expectations for inflation, GDP growth, and unemployment rates in the Eurozone. While headline inflation expectations remained stable, there were significant revisions to HICP energy and food inflation, as well as upward revisions to inflation excluding energy and food (HICPX). Respondents cited recent data showing more persistence in inflation and higher forecast wage growth as key factors driving these revisions.

In terms of inflation, headline inflation was expected to decline from 5.5% in 2023 to 2.7% in 2024 and 2.2% in 2025. Longer-term inflation expectations for 2028 remained unchanged at 2.1%. Uncertainty surrounding longer-term inflation expectations remained high, with risks balanced.

GDP growth expectations were slightly down for 2024 and 2025, with a downward tilt in the balance of risks. Respondents noted a modest increase in economic activity from the second quarter of 2023 to the first quarter of 2024, but longer-term GDP growth expectations were revised down slightly to 1.3%.

Unemployment expectations were around 6.6-6.7% for 2023 to 2025 but declined to 6.5% for 2028. Respondents highlighted a robust labor market and hiring intentions as factors driving the downward revisions in the short term.

Overall, the SPF results indicate a mixed outlook for the Eurozone economy, with concerns about inflation persistence, slower GDP growth, and uncertainties surrounding monetary policy decisions. The data provides valuable insights into the economic landscape and the factors shaping expectations for the future.