The ECB Survey of Professional Forecasters : Second quarter of 2023, May 2023

In the ECB Survey of Professional Forecasters (SPF) for the second quarter of 2023, expectations for headline HICP inflation in 2023 were revised down compared with the previous survey (conducted in the first quarter), while expectations for HICP inflation excluding food and energy (HICPX) in 2023 were revised up. The downward revision of headline inflation expectations primarily reflects lower expected energy price inflation (particularly for natural gas), while the upward revision for HICP inflation excluding food and energy primarily reflects recent data outturns, as well as higher wage growth forecasts. Headline inflation was expected to decline from 5.6% in 2023 to 2.6% in 2024 and 2.2% in 2025. Longer-term inflation expectations (which relate to 2027) were unchanged at 2.1%. GDP growth expectations were revised up for 2023, but down for 2024 and 2025. The upward revision for 2023 largely reflects a carry-over from stronger than expected growth in the fourth quarter of 2022, while the downward revisions for 2024 and 2025 mainly reflect recent financial market stresses and tighter financial conditions. Longer-term GDP growth expectations remained unchanged at 1.4%. The profile for the expected unemployment rate has been revised downward by 0.1-0.2 percentage points for the period 2023-25, but upward slightly for 2027. The unemployment rate is expected to increase to 6.8% in 2023 (having stood at 6.6% in February 2023) and remain at that level in 2024, before declining gradually to stand at 6.5% in 2027.