- SPF inflation expectations have been revised downwards for 2016 from 1.0 to 0.7 percent
- Real GDP growth expectations are unchanged in the 1.7-1.8% range
- Unemployment rate forecasts have been revised downward and remain on a downward path
Respondents to the ECB’s Survey of Professional Forecasters (SPF, Q1 2016) have revised their inflations expectations for 2016 downwards by 0.3 percentage point to 0.7 percent, mainly reflecting oil price developments. Inflation is expected to pick up further in 2017 to 1.4% and in 2018 to 1.6%. The longer-term inflation expectations (for 2020) stand slightly reduced at 1.8%. In the short term, respondents expect a strong dampening impact on inflation from the latest oil price developments, counteracting favourable base effects arising from past developments. However, most SPF respondents continue to envisage a strong pick-up in inflation in 2016 and 2017, including a profile of gradually increasing underlying inflation which is shaped by the ongoing expansion of economic activity and supported by the monetary policy stance. The weaker euro exchange rate in 2015 is expected to exert some upward pressure on inflation in 2016 as well.
Real GDP growth expectations are unchanged in the 1.7-1.8% range. SPF respondents forecast growth in private consumption and investment as the main drivers of the ongoing economic expansion. Domestic demand is strengthened by accommodative monetary policy as well as by the current low level of energy prices, which is supporting the disposable income of households and profit margins of companies. These factors are expected to outweigh the negative impact arising from weaker prospects for external demand from emerging markets.
Unemployment rate forecasts have been revised downwards across all horizons and remain on a downward path. SPF respondents expect that the unemployment rate will keep declining as solid growth in economic activity continues.
Source: ECB Press Release
