ecb survey of professional forecasters outlook euro area

a range rather than a single point value. Can macroeconomists forecast risk? Notes: The SPF asks respondents to report their point forecasts and to separately assign probabilities to different ranges of outcomes. The Survey of Professional Forecasters is the oldest quarterly survey of macroeconomic forecasts in the United States. Expectations are reported not only as point forecasts, but also as probability distributions, providing a quantitative assessment of risk and uncertainty. The ECB Survey of Professional Forecasters Luca Onorante European Central Bank* (updated from A. Meyler and I.Rubene) October 2009 Outline of the presentation Main features of the SPF panel quarterly survey conducted since 1999Q1 euro area macroeconomic expectations for HICP inflation, real GDP growth and the unemployment rate short- and more medium- and longer-term horizons surveyed … These imply opposing revisions – an upward revision of 0.5 percentage points for 2020, a downward revision of 0.4 percentage points for 2021 and an upward revision of 0.2 percentage points for 2022 (see Table 1). Key figures and latest releases at a glance. This paper explores the potential gains from alternative combinations of SPF forecasts, including statistical combinations based on principal components analysis and trimmed means, performance-based weighting, least squares estimates of optimal weights as well as Bayesian shrinkage. To do this, we use the anonymous data provided by cookies. Relative to a set of simple benchmarks, this performance is somewhat better for GDP growth than for inflation, although in the former case it diminishes substantially with the forecast horizon. Frankfurt (AFP) - The inflation outlook for the euro area is improving as growth picks up and the effects of the European Central Bank's policy measures feed through into the economy, an ECB survey showed on Friday. Get an overview of what the European Central Bank does and how it operates. To identify the effects on individual expectations we adopt a panel approach, where the Eurosystem Asset Purchase Programme (APP) shocks are used as covariates to explain the revisions in the individual inflation forecasts; … mitigation measures, uncertainty surrounding expectations for euro area inflation, growth and unemployment remained elevated in the fourth quarter of 2020 ECB Survey of Professional Forecasters (SPF). As with their expectations for headline inflation, respondents on average see the balance of risks to their HICPX expectations as being to the downside. Using the SPF microdata, this paper examines the stability of the distribution of long-term inflation expectations in the euro area following the Great Recession. Discover more about working at the ECB and apply for vacancies. Reproduction for educational and non-commercial purposes is permitted provided that the source is acknowledged. The SPF forecasts for HICPX in 2020 and 2021 are 0.1 percentage points below the figures projected in the September 2020 ECB staff macroeconomic projections but the same for 2022. Before 2015, the SPF results were reported in the ECB’s Monthly Bulletin (Q1 – Feb, Q2 – May, Q3 – Aug, Q4 – Nov). May 4, 2020 Market Analysis. For 2022 point forecasts have been revised up on average by 0.3 percentage points Longer-term growth expectations (which refer to 2024) remained stable at 1.4%. PRESS RELEASE 17 July 2015 SPF inflation expectations have been revised upwards for shorter-term and longer-term horizons. Key figures and latest releases at a glance. ECB Economic Bulletin, Issue 1, 2019) Abstract For two decades the ECB Survey of Professional Forecasters (SPF) has been collecting point forecasts and probability distributions for euro area-wide HICP inflation, real GDP growth and the unemployment rate at different horizons. The survey asks for point forecasts and probability distributions for the rates of annual HICP inflation, annual core HICP inflation, real GDP growth and unemployment expected in the euro area at several horizons: Point expectations for annual growth in compensation per employee, the oil price (in US dollars), the USD/EUR exchange rate and the rate on the ECB’s main refinancing operations at different horizons are also collected. Browse the ECB’s reports, publications and research papers and filter them by date or activity. Quantitative indicators of uncertainty for inflation derived from the reported probability distributions remained elevated for all horizons but particularly for the shorter horizons. While the ECB insists that the survey results do not represent the views of its staff and decision-making bodies, the SPF survey usually provides an indication of where the ECB`s own forecasts -- scheduled for release on September 3 -- are … in the third quarter, they were revised down for 2020 and 2021 by 0.1 percentage points. This chart shows the average probabilities they assigned to different ranges of inflation outcomes in 2020, 2021 and 2022. The second special survey conducted in 2013 also explored how forecast processes and methodologies might have changed following the financial crisis. (2015), ECB Working Paper 1865). Get an overview of what the European Central Bank does and how it operates. Respondents cited fears regarding a further widespread wave of infections and lockdowns as well as the general level of uncertainty as possible factors holding back economic activity and consequently inflation. Euro zone inflation will be weaker than previously expected this year and next, an updated survey for the European Central Bank indicated on Thursday, darkening the euro zone's economic outlook. These revisions appear to mainly reflect recent data outcomes. The surveyors lifted their growth expectations to 2.2% for … Respondents expected: (i) oil prices to increase from around USD 42 per barrel in the fourth quarter of 2020 to slightly above USD 50 per barrel by 2022; (ii) the euro to appreciate very slowly against the US dollar in the period to 2022; (iii) the ECB’s main policy rates to remain low until at least 2022; and (iv) nominal wage growth to rebound in 2021 and reach 2.4% by 2025. This represents downward revisions of 0.1 percentage points for each horizon relative to the previous survey. Furthermore, participants are asked to provide their assumptions underlying these forecasts, for the oil price in US dollars, the exchange rate … Euro zone inflation will be weaker than previously expected this year and next, an updated survey for the European Central Bank indicated on Thursday, darkening the euro zone's economic outlook. The aggregate results and microdata are published four times a year. As a small number (around 5%) of respondents reported expectations of negative rates, the average (mean) expectation is slightly negative. Expectations for inflation excluding energy, food, alcohol and tobacco (HICPX) continue to show a gradual upward movement (see Chart 1). The expected level of GDP in 2021 was 0.2 percentage points higher than was expected in the previous round. Since 1999, the European Central Bank (ECB) conducts a quarterly survey of the economic outlook in the euro area among professional forecasters. The change in average compensation per employee is expected to be negative in 2020 before rebounding to be positive in 2021 and 2022 – see panel (d) of Chart 13. [1] HICP inflation expectations were 0.3%, 0.9% and 1.3% for 2020, 2021 and 2022 respectively. Compared with the previous They generally expect the negative demand impact to outweigh any possible (upward) supply-side effects. Respondents reported that the balance of risks to their baseline inflation outlook was largely to the downside. Multiple forecasters specifically mentioned that their baseline was premised on one or more vaccines being available by mid-2021. It is conducted four times a year, in January, April, July and October. Respondents reported increased overall uncertainty surrounding the outlook for inflation and considered that the balance of risks was … To do this, we use the anonymous data provided by cookies. SPF GDP growth expectations now stand at -7.8% for 2020, +5.3% for 2021 and +2.6% for 2022 (see Chart 6). The probability distribution for 2025 remained largely unchanged. Such findings are in line with the predictions of theoretical models emphasising the impact of the lower bound on policy rates and uncertainty about monetary transmission. More specifically, for 2020, respondents cited the better than expected economic data for the second and third quarters of 2020 as the main factor behind the slightly less negative outlook. A key aspect is the evaluation of the entire predictive density including an evaluation of the impact of location, spread, skew and tail risk on density forecast performance. Figure B, which shows the histogram of inflation levels respondents said they considered to be in line with the ECB’s price stability objective, presents essentially the same information as Figure A but from a different perspective. According to the ECB's regular quarterly survey of professional forecasters, euro zone growth is expected to average 1.6% this year, unchanged from an earlier prognosis. Beyond domestic issues, an increasing number of respondents mentioned downside risks from a no-deal Brexit and increased tensions in trade relations between the United States and China. It compares the results with estimations for the pre-crisis period. Discover euro banknotes and their security features and find out more about the euro. They noted that this also partially explained the slightly less strong rebound now expected for 2021, as it is coming from a higher base. All rights reserved. Other than for 2020, where the impact of energy is reflected, the profiles of HICP and HICPX are largely similar over all horizons, although the expected level of HICPX is approximately 0.1 percentage points lower than that for HICP at each horizon. Thus the histogram should span the entire range 0-2%, with all elements between 0.0% and 1.4% having same value of 5.6% (i.e. Since 1999, the European Central Bank (ECB) conducts a quarterly survey of the economic outlook in the euro area among professional forecasters. Data on inflation swaps and SPF forecasts show that both market-based and survey-based measures have a non-negligible predictive power for inflation developments, as compared to statistical benchmark models. A pseudo real-time out-of-sample performance evaluation of these alternative combinations is provided, and a check of the sensitivity of the results to possible data snooping bias using a novel real-time meta selection procedure not subject to the data snooping critique. Outside of these values, the proportion drops substantially. Upside risks mentioned related mainly to earlier than expected availability of a vaccine and to fiscal support measures, in particular the European recovery fund, which some respondents saw as possibly leading to higher productivity and higher than normal fiscal multipliers. Oil price expectations for the fourth quarter of 2020, at USD 42 per barrel, were the same as reported in the previous round. To do this, we use the anonymous data provided by cookies. Browse the ECB’s reports, publications and research papers and filter them by date or activity. This article investigates the relationship between macroeconomic uncertainty, measured as the dispersion in economic forecasts across survey participants, and financial market volatility. It finds that over this period inflation tended to be higher than had been expected, but there was less evidence of any systematic errors for GDP and unemployment forecasts. For further information you can contact us at ecb-spf@ecb.europa.eu. Longer-term inflation expectations (for 2025) were 1.7% (compared with 1.6% in the previous round). 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[3] The aggregate probability distributions for the calendar years 2020-22 are presented in Chart 2. The distribution of individual point forecasts was largely similar to that observed since the first quarter of 2019, with the modal response unchanged at 1.6% (see Chart 4). Notes: The SPF asks respondents to report their point forecasts and to separately assign probabilities to different ranges of outcomes. Survey of Professional Forecasters. The apparent difference of 0.2 percentage points is due to rounding conventions. According to the quarterly conducted ECB Survey of Professional Forecasters (SPF), forecasts for the annual HICP inflation averaged at 1.2 percent for 2019 and 2020 and 1.4 percent for 2021, down from 1.3 percent, 1.4 percent and 1.5 percent in the previous round of survey. Consumer prices in the euro area continued to fall in November, adding to the case for more European Central Bank stimulus next week. The main source of the elevated uncertainty and downside risk was the coronavirus and its economic impact. (2013), ECB Working Paper 1540). Reflecting the ongoing impact of the coronavirus (COVID-19) pandemic and mitigation measures, uncertainty surrounding expectations for euro area inflation, growth and unemployment remained elevated in the fourth quarter of 2020 ECB Survey of Professional Forecasters (SPF). In terms of other summary statistics, the median point forecast and the estimated mean of the aggregate probability distribution were both at 1.6% (see Chart 3).

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