Financial analysts are subtlety adjusting their predictions for economic expansion in 2025.
The team behind the European Central Bank (ECB)'s monetary policy has made some adjustments to their predictions for the eurozone's growth in the near future. They've revised their estimate for the region's GDP, now predicting a 1.2% expansion in 2025. This revised figure was shared by the ECB in recent announcements. Initially, their forecast for 2025 was a slightly more optimistic 1.3%.
The change in projections is largely attributed to anticipations of slower growth in the second half of 2022. This expected downturn is predicted to create drag effects into the following year. The ECB's forecasters still expect a 0.7% increase in GDP for 2022. For 2026, they're sticking to their prediction of a 1.4% growth rate.
As for inflation, the ECB's experts now believe it will fall short of their target of 2% in 2023. They've revised their estimation down to 1.9%, decreased from their previous summer projection of 2%. This prediction is based on the assumption that oil prices will be lower than initially anticipated. The ECB continues to forecast an average inflation rate of 2.4% in 2022.
From the ECB Council's perspective, inflation might see an upward trend in the coming months, eventually returning to the central bank's 2% target around 2023. The ECB shares findings from their Survey of Professional Forecasters (SPF) four times a year, gathering input from economists on their growth and inflation predictions for the eurozone's 20 member states.
On a recent Thursday, the ECB rolled out its third rate cut of the year, lowering the key deposit rate by 0.25 percentage points to 3.25%. This move comes five weeks after the previous rate decrease. The primary decision-makers at the ECB, led by President Christine Lagarde, initiated the rate hike in June, followed by another in September.
The ECB's revised growth prediction for the second half of the year is less optimistic, with half of the year expected to see a slower expansion due to anticipated downturns. Despite this adjustment, the ECB still anticipates a 0.7% increase in GDP for 2022.
