Collection of Euro bills

Headline inflation expectations are being revised down, and growth forecasts for 2023 are up, according to the latest survey of economists by the European Central Bank (ECB) — but it’s not all rosy.

The central bank’s most recent survey of professional forecasters, which was carried out between March 31 and April 5, showed that headline inflation expectations, for the euro area in 2023 and 2024, were revised down to 5.6% and 2.6%, respectively.

Forecasts for real GDP growth were also revised up for 2023, primarily due to stronger than expected output in the fourth quarter of 2022.

However, it’s also expected that tighter financial conditions will bite in 2024 and 2025, weighing on growth for the next couple of years.

Additionally, while headline inflation expectations are down for the next couple of years, thanks to easing energy prices, core inflation (excluding food and energy) forecasts are up a bit, driven by stronger wage growth.

Forecast unemployment rates were also revised down by between 0.1 and 0.2 percentage points for the 2023 to 2025 period.

“The unemployment rate is now expected to rise to 6.8% in 2023 and remain at that level in 2024, before declining gradually to stand at 6.5% in 2027,” the ECB noted.