FRANKFURT (Multibagger) - In a recent update, the European Central Bank (ECB) has revised its 2024 economic growth forecast downward. Despite this, the ECB remains optimistic about inflation, aiming to achieve its 2% target by the end of 2025.
After facing challenges with high inflation rates in recent years, the ECB began reducing interest rates in June as inflation pressures started to ease. The slowing economic growth is a key factor contributing to this moderation, with the eurozone GDP now expected to expand by 0.8% this year, slightly below the previous projection of 0.9%.
Looking ahead, inflation is forecasted to reach 2.2% next year, slightly above the ECB's target. However, the trajectory of the projections indicates a gradual decline towards the target in the latter part of the year.
Here are the ECB's latest projections for inflation and economic growth, compared to the previous forecasts from June:
- 2024: GDP growth 0.8% (0.9%), Inflation 2.5% (2.5%)
- 2025: GDP growth 1.3% (1.4%), Inflation 2.2% (2.2%)
- 2026: GDP growth 1.5% (1.6%), Inflation 1.9% (1.9%)
It's important to note that there was a correction made to the 2026 GDP forecast, which now stands at 1.5% instead of 1.6% as previously reported.
Analysis:
The ECB's adjustment to its economic growth projection reflects the ongoing challenges in the eurozone economy. While the inflation rate is expected to remain above the 2% target in the near term, the gradual decline towards the target signifies a positive outlook for price stability in the future. Investors should monitor these developments closely to make informed decisions regarding their financial portfolios.