ECB Lifts Growth and Inflation Projections Amid Energy Shock Concerns

The European Central Bank (ECB) has revised its growth and inflation projections upwards, indicating a more resilient economy than initially thought. Inflation is expected to remain high at 2.5% next year, above the 2.3% forecast in June.

The ECB's baseline projections show that GDP growth will be 0.9% this year, up from 0.8% in June, and 1.4% in 2027, compared to 1.2% previously. Core inflation is seen at 2.6% in 2027, above the 2.5% forecast earlier.

The ECB's projections suggest that the war-induced energy shock will dissipate slowly, with consumption and investment holding up well despite high energy prices. However, underlying inflation remains a concern, as expensive energy could eventually lift the cost of other goods and services.