Analysts See "Significant Move Lower" In ECB Growth Projections (2/2)

With the ECB's June staff projections penciling in 2023 real GDP growth of 0.9%, a downward revision is in order - 2024's 1.5% also looks on the high side. Current analyst consensus is 0.6% for 2023, and 0.9% for 2024.

• BofA writes: "Given the very optimistic starting point, we would expect a significant move lower in growth forecasts, particularly for 2024, heading closer to 1%. Recent developments in soft data, external demand, and external assumptions would justify such a move. 2025 is likely to move a bit lower too for the same reasons. That will pave the way for slightly softer core inflation in the medium term."
• Daiwa: "the ECB's updated macroeconomic projections to be presented in the coming meeting will be an important consideration...the account of the July policy meeting reported that the Governing Council already judged that signs of a possible downward surprise in economic activity compared with the ECB's June projections "constituted important news", which ultimately led to the decision to open the door to a pause in rates this month. And, certainly, the ECB's GDP outlook will be revised down next week. ... And survey indicators such as the PMIs and Commission sentiment indices, as well as falling money supply and tighter credit conditions point to a good chance of contraction in Q3 and perhaps beyond, compared to the ECB's previous projection of growth of 0.3%Q/Q and 0.4%Q/Q this quarter and next."
• ABN Amro writes more generally that "Economic data published this week have clearly illustrated that the eurozone economy is being hit by the unprecedented sharp interest rate hikes by the ECB since the middle of 2022, and the cooling of the global economy. We expect the weakness in the eurozone economy to continue for a while, with GDP probably contracting moderately or remaining close to stagnant during H2 2023 and H1 2024."

Source: ECB