European economists continue to expect that inflation will ease, dropping below the 2.0% mark in the year ahead, according to the European Central Bank’s (ECB) latest survey of industry forecasts.
The latest edition of the central bank’s quarterly survey of economists, carried out in early October, found a 0.1 percentage point dip in inflation expectations for 2025 to 1.9%.
Inflation forecasts for 2024 remain unchanged at 2.4%, and the 2026 forecast remains at 1.9% too — just under the longer-term inflation expectation of 2.0%.
Core inflation expectations, which excludes the volatile food and energy components, were revised upwards slightly for 2024, due to stronger than expected services inflation, the ECB said.
As inflation recedes and monetary policy eases, economists also expect growth to start picking up next year.
While real GDP growth is only expected to come in at 0.7% this year, that’s seen rising to 1.2% in 2025, and to 1.4% in 2026.
“Compared with the previous survey, the expectations for 2025 were revised down by 0.1 percentage point,” the ECB said.
“The downward revision for 2025 largely reflects a carry-over from weaker than previously expected growth in the second half of 2024,” it noted.
Longer-term, real GDP growth is expected at 1.3%.