EU flags waving in front of European Parliament building. Brussels, Belgium

Higher inflation and weaker growth are in the forecast, according to the European Central Bank’s (ECB) latest survey of economists.

The ECB reported that its survey of forecasts for the fourth quarter saw upward revisions to inflation forecasts through 2024. Euro area inflation is now expected to come in at 8.3% this year, 5.8% in 2023, and 2.4% in 2024 — representing increases of 1.0, 1.2 and 0.3 percentage points from the previous edition of the survey.

“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,” the ECB said, adding that longer-term inflation expectations remain unchanged at 2.2% on average.

At the same time, GDP growth expectations for 2023 were “revised down substantially,” the ECB said.

Specifically, survey respondents now expect almost no growth in 2023 (0.1%), including negative growth between the third quarter of 2022 and the first quarter of 2023 (-0.7%).

“This is attributed to ongoing high energy price pressures, inflation affecting households’ purchasing power, a weaker global economy and tighter monetary policy,” the ECB said.

As growth slows to a crawl, unemployment is expected to rise, the ECB said, with the jobless rate seen hitting 7.1% in 2023.

The latest edition of the survey was carried out between September 30 and October 6.