ECB survey points to shallower recession, stronger rebound

© Reuters. ECB headquarters in Frankfurt© Reuters. ECB headquarters in Frankfurt

FRANKFURT (Reuters) – The euro zone economy may contract less this year than the European Central Bank had forecast and its recovery could also be quicker, the bank’s Survey of Professional Forecasters showed on Friday.

The quarterly survey sees the economy shrinking by 8.3% this year, a downgrade from its May projection for a 5.5% drop but a more benign outcome than the ECB staff’s own estimate for an 8.7% drop. For next year, growth is seen at 5.7%, above the ECB’s staff’s 5.2% estimate in June.

Although the euro zone suffered its biggest recession in generations, recent data suggest the economy bottomed out in April or May and a recovery is now underway, even if it is bound to be choppy, uneven and prone to setbacks.

The survey was also more optimistic about inflation as it sees 2020 price growth at 0.4% against the ECB’s 0.3% projection while inflation in 2021 is seen at 1% as against the ECB’s 0.8% prediction.

Growth projections for 2025, deemed as the “longer-term”, were left unchanged at 1.4% but the longer-term inflation forecast was cut to 1.6% from 1.7%, short of the ECB’s target for inflation at just below 2%.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.