FRANKFURT (Reuters) – The euro zone economy faces slower economic growth and higher inflation as Russia’s invasion of Ukraine pushes up costs, disrupts trade and hits confidence, a European Central Bank poll of economists showed on Friday.
Economists polled in the ECB’s Survey of Professional Forecasters (SPF) put inflation at 6% this year, or twice as high as predicted just two months ago, and saw it staying just above the ECB’s 2% target in the longer term.
“Regarding the near-term outlook, respondents viewed high inflation as being primarily determined by ‘cost-push’ rather than ‘demand-pull’ factors, and considered that the conflict in Ukraine had re-ignited and amplified price pressures that had started to show signs of peaking,” the ECB said in a press release.
Growth was seen slowing to 2.9% this year from 4.2% in the previous SPF and the ECB said “almost all” respondents attributed their downward revisions to the repercussions of the Russian invasion of Ukraine.
“Aside from higher energy and food commodity prices, disruptions in some sectors and the sanctions imposed, they noted that the situation had resulted in falls in business and consumer confidence and loss of purchasing power for households,” the ECB added.
2022 2023 2024 longer term
HICP (%) 6.0 2.4 1.9 2.1
GDP GROWTH (%) 2.9 2.3 1.8 1.4
(Reporting By Francesco Canepa; editing by Kirsten Donovan)
