Economic Experts Survey: Strong Rise in Global Inflation Expectations (Q3 2022)
What expectations do economists worldwide have for future price developments? To what extent are geopolitical challenges and the energy crisis reflected in experts’ rising inflation expectations? The current wave of the Economic Expert Survey (EES) conducted by the ifo Institute and the Swiss Economic Policy Institute examines economists’ inflation expectations at the global level. The result: high inflation rates are expected worldwide. Inflation expectations have risen significantly compared with expectations in the previous quarter.
The global average expected inflation rate for 2022 is 9.5%. This is the median of the average expected inflation rates at the country level. The median is used because expected inflation rates vary widely by region and are dramatically higher in individual countries and regions such as Africa than in the rest of the world.
The expected average rate of 9.5% in the third quarter represents a significant increase compared to the expected rate of 7.7% in the second quarter. If the experts are correct, the inflation rate for 2022 will be 6.7 percentage points higher than the World Bank’s average inflation rate over the past decade (2010 to 2019). The experts also expect high inflation rates worldwide in the coming years. Thus, expectations for future price increases remain high. With an average inflation rate of 7.5% in 2023, only a slight decline compared to 2022 is expected (expectation in Q2: 6.2%). The idea that inflation might remain high in the longer term is shown by the inflation expectations for 2026, where participants still anticipate a strongly increased inflation rate of 5.0% (expectation in Q2: 4.5%).
Note: The figure shows the expected inflation rates on a global average for 2022 (9.5%), 2023 (7.5%) and 2026 (5.0%). The median of the averages at country level is shown.
There are clear differences when looking at expectations in the individual regions of the world. For 2022, the highest price increases are expected in East Africa (almost 60%), North Africa (47%), South America, and West Asia (30% each). In Southeast Asia (5.6%), East Asia (5.9%), and Oceania (6.8%), but also in North America (7.2%) and Western Europe (7.3%), by contrast, inflation expectations for 2022 are well below the global average.
There are also drastic regional differences within the continents. For example, inflation expectations in Eastern Europe (19%) are more than twice as high as in Western Europe. South Africa (7.6%) is also an outlier among the otherwise significantly higher inflation rates in other regions in Africa. In Asia, inflation expectations are similarly heterogeneous.
Note: The chart shows the arithmetic mean of the expected inflation rates in the regions for 2022.
Note: The chart shows the arithmetic mean of the expected inflation rates in the regions for 2023.
Note: The chart shows the arithmetic mean of the expected inflation rates in the regions for 2026.
Inflation Rates Expected to Decline in the Long Term – but Remain at a High Level
Long-term expectations also differ greatly between the regions. In Eastern Europe, a significantly lower inflation rate (7.5%) is expected for 2026 than in 2022. Nevertheless, this value is the highest compared to the other European regions. In Western and Northern Europe, expectations for 2026 are only just over 3% in comparison. This means that Western Europe is expected to have the lowest rate of price increases worldwide in 2026 (as in the Q2 results).
North America is almost on a par, with a similar inflation expectation of 3% in 2026. A similar decline of 4 percentage points can be seen in Central America, where the inflation expectation is still 7.5%. For South America, inflation expectations are halved – but remain at a high level of 14%.
There are major differences in the development of inflation expectations in Asia. While, for example, inflation expectations in West Asia fall significantly by 23 percentage points (to 7.8%) or in South Asia by 9 percentage points (to 14.7%), inflation expectations in East Asia (−1.2 percentage points, to 4.9%) and Southeast Asia (−1.3 percentage points, to 4.3%) remain relatively constant.
An interesting pattern also emerges in Africa. While expected inflation rates in East Africa still remain at a very high level of 37% in 2026, they nevertheless fall by 23 percentage points for 2026 compared with expectations for 2022. Moderate declines of 3 percentage points can be observed in West and Central Africa. In South Africa , by contrast, the expected inflation rate rises by just under 2 percentage points from 7.6% to 9.5%. This makes South Africa the only region where higher rates of price increases are expected in 2026 than in 2022.
In Oceania, inflation expectations decrease from 6.8% in 2022 to 4.2% in 2026.
The Economic Experts Survey (EES) is a quarterly survey conducted by the ifo Institute and the Swiss Economic Policy Institute. This time, 1,687 economic experts* from 129 countries participated in the inflation survey, which ran from September 7 to September 21, 2022.
