The ECB survey of professional forecasters. Third quarter of 2018, July 2018.
Date: 2018-08-20
Institutions: European Central Bank
Subjects: European Central Bank, economic forecasting, economic situation, inflation, serial publication

The ECB Survey of 
Professional Forecasters 

Third quarter of 2018 

July 2018 

 
 
Contents 

1 

2 

3 

4 

5 

Expectations for HICP inflation revised upwards on account of oil; 
underlying inflation expectations unchanged 

Longer-term inflation expectations stable at 1.9% 

Real GDP growth expectations revised down for 2018 and 2019 

Unemployment rate expectations little changed 

Expectations for other variables 

3 

4 

6 

8 

10 

The ECB Survey of Professional Forecasters (SPF) – Third quarter of 2018 

1 

 
The results of the ECB Survey of Professional Forecasters (SPF) for the third quarter 
of 2018 show average inflation expectations of 1.7% for each of 2018, 2019 and 
2020.1 Compared with the previous survey, this represents upward revisions to 2018 
and 2019, attributable to oil price developments. Average longer-term inflation 
expectations (which refer to 2023) remained stable at 1.9%. Expectations for real 
GDP growth were revised down a little in the near term to stand at 2.2%, 1.9% and 
1.6% for 2018, 2019 and 2020, respectively. Expectations for real GDP growth in the 
longer term remained at 1.6%. Unemployment rate expectations were unchanged for 
2018 and 2019, but revised upwards slightly further out. 

Table 1 
Results of the SPF in comparison with other expectations and projections 

(annual percentage changes, unless otherwise indicated) 

Survey horizon 

2018 

2019 

2020 

Longer term1) 

HICP inflation 

Q3 2018 SPF 

Previous SPF (Q2 2018) 

Eurosystem staff macroeconomic projections (June 2018) 

Consensus Economics (July 2018) 

Euro Zone Barometer (July 2018) 

Memo: HICP inflation excluding food and energy 

  Q3 2018 SPF 

  Previous SPF (Q2 2018) 

  Eurosystem staff macroeconomic projections (June 2018) 

  Consensus Economics (July 2018) 

Real GDP growth 

Q3 2018 SPF 

Previous SPF (Q2 2018) 

Eurosystem staff macroeconomic projections (June 2018) 

Consensus Economics (July 2018) 

Euro Zone Barometer (July 2018) 

Unemployment rate2) 

Q3 2018 SPF 

Previous SPF (Q2 2018) 

Eurosystem staff macroeconomic projections (June 2018) 

Consensus Economics (July 2018) 

Euro Zone Barometer (July 2018) 

1.7 

1.5 

1.7 

1.7 

1.6 

1.2 

1.2 

1.1 

1.1 

2.2 

2.4 

2.1 

2.2 

2.2 

8.3 

8.3 

8.4 

8.3 

8.3 

1.7 

1.6 

1.7 

1.6 

1.6 

1.5 

1.5 

1.6 

1.4 

1.9 

2.0 

1.9 

1.8 

1.9 

7.9 

7.9 

7.8 

7.9 

7.8 

1.7 

1.7 

1.7 

1.6 

1.7 

1.7 

1.7 

1.9 

- 

1.6 

1.6 

1.7 

1.4 

1.6 

7.6 

7.5 

7.3 

- 

7.5 

1.9 

1.9 

- 

1.9 

1.8 

1.8 

1.8 

- 

- 

1.6 

1.6 

- 

1.4 

1.3 

7.5 

7.4 

- 

- 

7.2 

1) Longer-term expectations refer to 2023 for the Q3 2018 SPF and Consensus Economics and to 2022 for the Q2 2018 SPF and the 
Euro Zone Barometer. 
2) As a percentage of the labour force. 

1   The survey was conducted between 2 and 6 July 2018. The total number of responses was 56. The 
survey requested information on expectations for the euro area HICP inflation rate (overall and 
excluding food and energy), the real GDP growth rate and the unemployment rate for 2018, 2019, 2020 
and 2023, as well as for each of these variables one and two years ahead, with respect to the latest 
available data point. Participants were provided with a common set of the latest available data for 
annual HICP inflation (June 2018 flash estimates: overall inflation, 2.0%; excluding food and energy, 
1.0%), annual GDP growth (Q1 2018, 2.5%) and unemployment (May 2018, 8.4%). 

The ECB Survey of Professional Forecasters (SPF) – Third quarter of 2018 

2 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                                      
1 

Expectations for HICP inflation revised upwards on account of oil; 
underlying inflation expectations unchanged 

The results of the survey for the third quarter of 2018 show average inflation 
expectations of 1.7% for each of 2018, 2019 and 2020 (see Chart 1). Compared 
with the previous survey, this represents upward revisions of 0.2 percentage points 
(p.p.) for 2018 and 0.1 p.p. for 2019, while expectations for 2020 were unchanged. In 
their qualitative comments, respondents typically attributed their upward revisions to 
the higher oil price, which had, to an extent, already been reflected in the most 
recent HICP data. The latest SPF results for inflation over the period 2018-2020 are 
comparable with the expectations reported in other surveys (see Table 1). 

Average expectations for inflation excluding energy and food were unchanged 
at 1.2%, 1.5% and 1.7% for 2018, 2019 and 2020, respectively. This pick-up in 
core inflation remained underpinned by a pick-up in annual growth in compensation 
per employee, which was expected to increase to 2.3% by 2020. Consensus 
Economics introduced core inflation to their survey (for 2018 and 2019) in June, and 
the results of this SPF are comparable with those reported there. 

Chart 1 
Inflation expectations: overall HICP and HICP excluding food and energy 

(annual percentage changes) 

Q2 2018 – overall
Q3 2018 – overall

Q2 2018 – excl. food and energy
Q3 2018 – excl. food and energy

2.0

1.8

1.6

1.4

1.2

1.0

0.8

2018

2019

2020

The probability distributions for inflation at the different horizons tilted to the 
right, as probabilities were revised downwards for lower inflation outcomes 
and upwards for higher inflation outcomes. The changes in reported probabilities 
were most pronounced for the two probability ranges either side of the central range: 
there was a decrease in the probability assigned to inflation outcomes in the 1.0%-
1.4% range for each of 2018, 2019 and 2020, compared with an increase for 
outcomes in the 2.0%-2.4% range in those years (see Chart 2). In contrast, there 
was little change in the probabilities assigned to more extreme inflation outcomes, 
captured in the upper and lower tails of the distributions. Less than 1% probability 
was assigned to deflation outcomes in 2018, 2019 and 2020. 

The ECB Survey of Professional Forecasters (SPF) – Third quarter of 2018 

3 

 
 
Chart 2 
Aggregate probability distribution for inflation expectations for 2018, 2019 and 2020 

Q1 2018 
Q2 2018
Q3 2018

2018

<0.0

0.0 to 0.4

0.5 to 0.9

1.0 to 1.4

1.5 to 1.9

2.0 to 2.4

2.5 to 2.9

3.0 to 3.4

≥ 3.5

2019

<0.0

0.0 to 0.4

0.5 to 0.9

1.0 to 1.4

1.5 to 1.9

2.0 to 2.4

2.5 to 2.9

3.0 to 3.4

≥ 3.5

2020

60

50

40

30

20

10

0

60

50

40

30

20

10

0

60

50

40

30

20

10

0

<0.0

0.0 to 0.4

0.5 to 0.9

1.0 to 1.4

1.5 to 1.9

2.0 to 2.4

2.5 to 2.9

3.0 to 3.4

≥ 3.5

Note: The SPF asks respondents to report their point forecasts and to separately assign probabilities to different ranges of outcomes. 
This chart shows the average probabilities they assigned to inflation outcomes in 2018, 2019 and 2020.  

2 

Longer-term inflation expectations stable at 1.9% 

The average point forecast for longer-term inflation expectations remained 
unchanged at 1.9%. The proportion of forecasters reporting a longer-term 

The ECB Survey of Professional Forecasters (SPF) – Third quarter of 2018 

4 

 
 
 
expectation of 1.9% increased, such that this became the most-frequently reported 
value (see Chart 3). The proportion of respondents reporting 2.0% also increased, 
as did the proportion reporting 1.6% and 1.7%, albeit to a lesser extent. Thus the 
average of all responses was little changed from the previous survey. The median 
point forecast remained at 1.9%, and the mean of the aggregate probability 
distribution was unchanged at 1.8% (see Chart 4). Overall, these three measures 
indicate that longer-term inflation expectations have recovered somewhat from the 
low rates recorded in 2016, but have not yet fully returned to their pre-crisis rates. 

Chart 3 
Distribution of point expectations for HICP inflation in the longer term  

(percentages of respondents) 

Q1 2018
Q2 2018
Q3 2018

35

30

25

20

15

10

5

0

≤1.3

1.4

1.5

1.6

1.7

1.8

1.9

2.0

2.1

2.2

≥2.3

Note: The SPF asks respondents to report their point forecasts and to separately assign probabilities to different ranges of outcomes. 
This chart shows the  spread of point forecast responses.  

Chart 4 
Longer-term inflation expectations 

(annual percentage changes) 

Average point forecast
Median point forecast
Mean of the aggregate probability distribution

2.1

2.0

1.9

1.8

1.7

1.6

2002

2004

2006

2008

2010

2012

2014

2016

2018

The probability assigned to low inflation outcomes decreased further. The 
probability assigned to inflation outcomes below 1.5% decreased, while that for 
inflation in the range 1.5% to 1.9% increased (see Chart 5). 

The ECB Survey of Professional Forecasters (SPF) – Third quarter of 2018 

5 

 
 
 
Chart 3 
Aggregate probability distribution of longer-term inflation expectations 

Q1 2018 
Q2 2018 
Q3 2018 

40

30

20

10

0

<0.0

0.0 to 0.4

0.5 to 0.9

1.0 to 1.4

1.5 to 1.9

2.0 to 2.4

2.5 to 2.9

3.0 to 3.4

≥ 3.5

Note: The SPF asks respondents to report their point forecasts and to separately assign probabilities to different ranges of outcomes. 
This chart shows the average probabilities they assigned to inflation outcomes in the longer term. 

The perceived balance of risks to expected inflation in the longer term 
remained to the downside. The asymmetry of a forecast distribution is indicative of 
the balance of risks that the forecast embodies. In the context of the SPF, where 
probabilities are reported for discrete intervals, there are a number of alternative 
ways of measuring asymmetry. Furthermore, because the point forecast is reported 
separately from the distribution, these two pieces of information can be combined to 
derive a further indicator of the balance of risks, calculated as the mean of the 
aggregate probability distribution minus the average point forecast. These different 
measures all continued to point to a balance of risks that is to the downside.2 

3 

Real GDP growth expectations revised down for 2018 and 2019  

Expectations for real GDP growth stood at 2.2%, 1.9% and 1.6% for 2018, 2019 
and 2020, respectively. Compared with the previous survey round, this implies 
downward revisions of 0.2 p.p. for 2018 and 0.1 p.p. for 2019. Respondents’ 
qualitative comments mainly referred to mechanical effects on their 2018 forecasts, 
stemming from the weaker-than-expected data releases for real GDP in the first 
quarter of 2018 together with other indicators released subsequently. Looking 
beyond 2018, a few respondents mentioned higher oil prices and an increase in 
global uncertainty since the previous survey round as factors behind their downward 
revisions. 

Movements in the reported probability distributions echoed those in point 
forecasts. Consistent with the pattern of revisions to point forecasts, the probability 
distributions for 2018, 2019 and 2020 moved towards lower GDP growth outcomes, 
with such revisions being larger the nearer the forecast horizon (see Chart 6). 

2   For further information, see the box entitled “How do professional forecasters assess the risks to 

inflation?”, Economic Bulletin, Issue 5, ECB, 2017. 

The ECB Survey of Professional Forecasters (SPF) – Third quarter of 2018 

6 

 
                                                                      
Chart 4 
Aggregate probability distribution for GDP growth expectations for 2018, 2019 and 
2020 

Q1 2018 
Q2 2018 
Q3 2018 

2018

< 0.0

0.0 to 0.4

0.5 to 0.9

1.0 to 1.4

1.5 to 1.9

2.0 to 2.4

2.5 to 2.9

3.0 to 3.4

3.5 to 3.9

≥ 4.0

2019

< 0.0

0.0 to 0.4

0.5 to 0.9

1.0 to 1.4

1.5 to 1.9

2.0 to 2.4

2.5 to 2.9

3.0 to 3.4

3.5 to 3.9

≥ 4.0

2020

50

40

30

20

10

0

50

40

30

20

10

0

50

40

30

20

10

0

< 0.0

0.0 to 0.4

0.5 to 0.9

1.0 to 1.4

1.5 to 1.9

2.0 to 2.4

2.5 to 2.9

3.0 to 3.4

3.5 to 3.9

≥ 4.0

Note: The SPF asks respondents to report their point forecasts and to separately assign probabilities to different ranges of outcomes. 
This chart shows the average probabilities they assigned to real GDP growth outcomes in 2018, 2019 and 2020.  

Longer-term growth expectations continued to stand at 1.6%. At this horizon, 
there was little change in the probability assigned to the central range (which spans 
real GDP growth outcomes of between 1.5% and 1.9%), while the probability 

The ECB Survey of Professional Forecasters (SPF) – Third quarter of 2018 

7 

 
 
 
assigned to outcomes below this increased from 37% to 40% and the probability 
assigned to outcomes above this decreased from 32% to 29% (see Chart 7). 

Risks to real GDP growth were seen as being to the downside across all 
horizons. The share of respondents who cited downside risks in their qualitative 
comments increased relative to the previous survey round, whereas only a few 
respondents explicitly stated that they saw risks as balanced or to the upside. 
Quantitative measures of the asymmetry of the probability distributions also indicate 
that the balance of risks around GDP growth expectations was skewed to the 
downside across the horizons.  The main downside risk reported related to the 
possibility of a further escalation of the trade conflict between the US and China, and 
its global implications. 

Chart 5 
Aggregate probability distribution for longer-term GDP growth expectations 

Q1 2018 
Q2 2018 
Q3 2018 

50

40

30

20

10

0

< 0.0

0.0 to 0.4

0.5 to 0.9

1.0 to 1.4

1.5 to 1.9

2.0 to 2.4

2.5 to 2.9

3.0 to 3.4

3.5 to 3.9

≥ 4.0

Note: The SPF asks respondents to report their point forecasts and to separately assign probabilities to different ranges of outcomes. 
This chart shows the average probabilities they assigned to real GDP growth outcomes in the longer term. 

4 

Unemployment rate expectations little changed 

The average point forecasts for the unemployment rate were 8.3%, 7.9% and 
7.6% for 2018, 2019 and 2020, respectively. The results for 2018 and 2019 were 
unchanged from those reported in the previous survey, whereas for 2020 this 
represented an upward revision of 0.1 p.p. To two decimal places, though, the 2020 
expectation was little changed. However, the reported probability distributions for 
2018 and 2019 moved slightly towards higher unemployment rates, consistent with 
the movement in the probability distributions for GDP growth towards lower growth 
rates (see Chart 8). Many respondents explained in their qualitative comments that 
they expected the pace of decline to slow over the period 2018-2020 as the 
unemployment rate neared historical lows and an increasing skills mismatch became 
more of a limiting factor. Other reasons cited for a slowing in pace of the decline in 
the unemployment rate were increasing labour supply growth and a possible 
dampening effect on labour demand if wage increases were in excess of productivity 
gains. SPF unemployment rate expectations for the period 2018-2020 are broadly in 
line with those reported in other surveys. 

The ECB Survey of Professional Forecasters (SPF) – Third quarter of 2018 

8 

 
Chart 6 
Aggregate probability distribution for the unemployment rate in 2018, 2019 and 2020 

Q1 2018 
Q2 2018 
Q3 2018 

2018

<5.5

5.5 to
5.9

6.0 to
6.4

6.5 to
6.9

7.0 to
7.4

7.5 to
7.9

8.0 to
8.4

8.5 to
8.9

9.0 to
9.4

9.5 to
9.9

10.0 to
10.4

10.5 to
10.9

≥ 11.0 

2019

<5.5

5.5 to
5.9

6.0 to
6.4

6.5 to
6.9

7.0 to
7.4

7.5 to
7.9

8.0 to
8.4

8.5 to
8.9

9.0 to
9.4

9.5 to
9.9

10.0 to
10.4

10.5 to
10.9

≥ 11.0 

2020

60

50

40

30

20

10

0

60

50

40

30

20

10

0

60

50

40

30

20

10

0

<5.5

5.5 to
5.9

6.0 to
6.4

6.5 to
6.9

7.0 to
7.4

7.5 to
7.9

8.0 to
8.4

8.5 to
8.9

9.0 to
9.4

9.5 to
9.9

10.0 to
10.4

10.5 to
10.9

≥ 11.0 

Note: The SPF asks respondents to report their point forecasts and to separately assign probabilities to different ranges of outcomes. 
This chart shows the average probabilities they assigned to unemployment rate outcomes for 2018, 2019 and 2020.  

Longer-term unemployment rate expectations were revised up by 0.1 p.p. to 
7.5%. As with the 2020 expectation, to two decimal places this result was little 
changed. At 7.2%, the longer-term unemployment rate reported in the June Euro 
Zone Barometer survey was lower than that reported in the SPF. The balance of 
risks to the longer-term unemployment rate remained skewed towards higher 

The ECB Survey of Professional Forecasters (SPF) – Third quarter of 2018 

9 

 
 
 
unemployment rate outcomes. Indeed, the probability assigned to outcomes greater 
than 8.0% increased, with some respondents explicitly stating that this change 
mirrored the downward revision in the balance of risks to growth (see Chart 9).  

Chart 7 
Aggregate probability distribution for the unemployment rate in the longer term 

Q1 2018 
Q2 2018 
Q3 2018 

60

50

40

30

20

10

0

<5.5

5.5 to
5.9

6.0 to
6.4

6.5 to
6.9

7.0 to
7.4

7.5 to
7.9

8.0 to
8.4

8.5 to
8.9

9.0 to
9.4

9.5 to
9.9

10.0 to
10.4

10.5 to
10.9

≥ 11.0 

Note: The SPF asks respondents to report their point forecasts and to separately assign probabilities to different ranges of outcomes. 
This chart shows the average probabilities they assigned to unemployment rate outcomes in the longer term. 

5 

Expectations for other variables 

Respondents’ average expectations were for: USD oil prices to keep decreasing until 
2020; the euro to continue appreciating against the dollar until 2020; the ECB’s main 
refinancing rate to stay at zero until the first half of 2019; and labour cost growth to 
increase until 2020 and then decrease slightly. 

The mean expectation for the rate on the ECB’s main refinancing operations was 
for it to remain around 0% in the near term, increasing a little to 0.14% in 2019 and 
then to 0.53% in 2020 (see panel (a) of Chart 10). The aggregate expectation for the 
near-term, quarterly profile was unchanged from the previous survey round, whereas 
the expected policy rate for both 2019 and 2020 was revised down. 

The average expected USD/EUR exchange rate fell at all horizons, but more so in 
the nearer term. Thus the expected pace of future appreciation increased relative to 
that lower starting point (see panel (b) in Chart 10).  

US dollar-denominated oil prices were expected to average $74 in the second half of 
2018, $72 in 2019 and $71 in 2020. This implies that forecasters now expect prices 
to be between 7.2% and 12.8% higher across the horizons than they did in the 
previous survey (see panel (c) of Chart 10). When combined with expectations of a 
weaker USD/EUR exchange rate, especially in the near term, these results imply a 
profile for the oil price in euro that is around 11.8% higher than in the previous 
survey. 

The ECB Survey of Professional Forecasters (SPF) – Third quarter of 2018 

10 

 
On average, annual growth in compensation per employee was expected to total 
2.0% in 2018, 2.2% in 2019 and 2.2% in both 2020 and 2023, largely unchanged 
from the previous survey (see panel (d) of Chart 10). 

Chart 8 
Underlying assumptions 

Q2 2018
Q3 2018

Q2 2018
Q3 2018

a) Interest rate on ECB's main refinancing                
x  operations (%)

b) USD/EUR exchange rate

0.7

0.6

0.5

0.4

0.3

0.2

0.1

0.0

-0.1

80

75

70

65

60

1.30

1.25

1.20

1.15

Q3 2018 Q4 2018 Q1 2019 Q2 2019

2019

2020

Q3 2018 Q4 2018 Q1 2019 Q2 2019

2019

2020

Q2 2018
Q3 2018

c) Oil price (USD)

Q2 2018
Q3 2018

d) Annual growth in compensation per                
d  employee (annual percentage changes)

2.50

2.25

2.00

1.75

1.50

Q3 2018 Q4 2018 Q1 2019 Q2 2019

2019

2020

2018

2019

2020

2021

2022

2023

© European Central Bank, 2018 

Postal address 
Telephone 
Website 

60640 Frankfurt am Main, Germany 
+49 69 1344 0 
www.ecb.europa.eu 

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The ECB Survey of Professional Forecasters (SPF) – Third quarter of 2018 

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