Eurozone growth, inflation outlook brighter: ECB survey
THE 2015 FIGURE REPRESENTS A DOWNWARD REVISION FROM THE PREVIOUS NUMBERS
The economic skies above Europe are brightening, with both growth and inflation seen moving higher, not least as a result of the European Central Bank’s policy measures, an ECB survey showed yesterday.
Nevertheless, inflation, already chronically low, will be dragged down even further this year by falling oil prices, but should rebound next year, according to the ECB’s regular quarterly survey of professional forecasters.
The SPF survey predicted that Eurozone inflation would stand at just 0.1 per cent in 2015, but rebound to 1.2 per cent in 2016 and 1.6 in 2017, moving towards the ECB’s target of around 2.0 per cent.
The 2015 figure represents a downward revision from the previous survey in the first quarter, but an upward revision for the inflation forecasts for both 2016 and 2017.
Monetary policy
“Respondents reported that the downward revision for 2015 mainly reflected lower oil prices, whereas monetary policy measures and exchange rate developments have resulted in upward revisions for 2016 and 2017,” the ECB explained.
Already on Wednesday, ECB chief Mario Draghi had said that the central bank’s raft of different policy measures, including a much-contested scheme to buy €1.1 trillion (Dh4.3 trillion, $1.2 trillion) worth of public sector and government bonds, were helping to fuel economic recovery. Turning to the growth outlook for the 19 countries that share the euro, the survey saw an upward revision in experts’ growth forecasts.
“Real GDP (gross domestic product) growth expectations were revised up for the short and medium-term horizons, standing at 1.4 per cent for 2015, 1.7 per cent for 2016 and 1.8 per cent for 2017,” the ECB said.
“The upward revisions were often explained by the low oil prices, which is expected to contribute positively to private consumption as a result of higher disposable income in households, as well as to company investment as a result of improved margins owing to lower production costs,” the ECB said.
The ECB’s asset purchase programme was also expected to have an effect, “both via the exchange rate, which many respondents reported as the main channel, and by keeping interest rates low and thus supporting investment,” the ECB said.