Compared with the previous round for the fourth quarter of 2021, expectations were revised up by 1.1 percentage points for 2022 and by 0.1 percentage points for 2023. Expectations for 2024 were not surveyed in the previous round, said an ECB press release.

Respondents attributed the upward revisions mainly to further increases in energy prices and the ongoing impact of demand-supply imbalances. At the same time, they continue to expect inflation to fall to 1.8 per cent by December 2022. Longer-term inflation expectations for 2026 stood at 2 per cent, revised up from 1.9 per cent in the previous round.

Respondents expect the emergence of the Omicron variant of the coronavirus to result in temporarily slower economic growth in the fourth quarter of 2021 and the first quarter of 2022, but a rebound in the second and third quarters of 2022.

Overall, growth expectations continue to imply that economic activity exceeded its pre-pandemic level (fourth quarter of 2019) in the fourth quarter of 2021.

Respondents now expect the level of GDP to rise above the path expected before the pandemic in 2023 (compared with 2024 in the previous round). Average longer-term expectations for real GDP growth were unchanged at 1.5 per cent.

Fibre2Fashion News Desk (DS)