The ECB’s latest Survey of Professional Forecasters points to a worsening macro mix for the Eurozone, with higher inflation and weaker growth in the near term. Headline HICP inflation is now expected to rise from 1.8% to 2.7% for 2026 and from 2.0% to 2.1% for 2027, while remaining stable at 2.0% in 2028. Core inflation was also revised higher, from 2.0% to 2.2% for both 2026 and 2027.
At the same time, growth expectations have been downgraded. Real GDP is downgraded from 1.2% to 1.0% in 2026 and from 1.4% to 1.3% in 2027, reflecting the drag from higher energy prices linked to the Middle East conflict. While forecasts for 2028 and the longer term remain unchanged at 1.3%, the near-term downgrade highlights rising concerns about economic momentum.
The labor market outlook remains stable, with unemployment expectations unchanged at 6.3% for 2026, easing gradually to 6.1% by 2028. However, wage growth projections have been revised higher, from 3.0% to 3.3% for 2026 and from 2.9% to 3.1% for 2027, suggesting continued pressure on costs that could feed into broader inflation dynamics.
Overall, the survey reinforces a stagflationary tilt in the Eurozone outlook. While inflation is expected to return to target over the longer term, the near-term combination of rising prices and slowing growth presents a clear challenge for the ECB.
| Indicator | 2026 | 2027 | 2028 |
|---|---|---|---|
| HICP Inflation | 1.8% → 2.7% | 2.0% → 2.1% | 2.1% → 2.0% |
| Core HICP Inflation | 2.0% → 2.2% | 2.0% → 2.2% | 2.0% → 2.1% |
| Real GDP Growth | 1.2% → 1.0% | 1.4% → 1.3% | 1.3% → 1.3% |
| Unemployment Rate | 6.3% → 6.3% | 6.2% → 6.2% | 6.1% → 6.1% |
| Wage Growth | 3.0% → 3.3% | 2.9% → 3.1% | 2.8% → 2.9% |
