Economic Experts Survey: Inflation Expectations Remain High Worldwide (Q2 2023)
How are economists’ expectations for future price developments unfolding worldwide? Are the central banks’ major interest rate hikes having an impact, and can we observe a decline in inflation expectations? The latest wave of the Economic Experts Survey (EES) conducted by the ifo Institute and the Swiss Economic Policy Institute examines economists’ inflation expectations at the global level. The result: inflation expectations remain at a high level worldwide. Even though it is true that the expected inflation rate for 2023 has declined slowly over the past three quarters, there have been no noticeable changes compared with the previous wave of the EES survey (first quarter of 2023).
Global Inflation Expectations Stagnating at a High Level
For 2023, the global average expected inflation rate is 7%. This is the median of the average expected inflation rates at the country level. The median is used because expected inflation rates vary greatly between regions and are drastically higher in certain countries and in regions such as Africa than in the rest of the world.
The figure shows the expected inflation rates as a global average for the years 2023 (7%), 2024 (6%), and 2026 (4.9%). The median of the averages at the country level is shown.
The average rate of 7% expected in the current quarter is therefore identical to the expected rate of 7% in the first quarter of 2023. Short-term inflation expectations are thus continuing to stagnate at a high level worldwide. Experts also expect high inflation rates worldwide in the years ahead. However, with an average expected inflation rate of 6% for 2024, a slight decline is expected on average compared with 2023.
In the long term up to 2026, inflation expectations also remain high at 4.9%. Long-term inflation expectations are thus almost identical to the results of the previous quarter (5%).
The chart shows the expected average inflation rates worldwide for the years 2023 and 2026 over time. The median of the averages at the country level is shown in each case.
The chart shows the arithmetic mean of the expected inflation rates in the regions for 2023.
The chart shows the arithmetic mean of the expected inflation rates in the regions for 2024.
The chart shows the arithmetic mean of the expected inflation rates in the regions for 2026.
The table shows the arithmetic mean of expected inflation rates in the regions for 2023, 2024, and 2026 for the latest Q2 2023 Economic Experts Survey wave and the change from the previous Q1 2023 wave in parentheses.
Falling Inflation Expectations in the Long Term, but Decline Compared with Previous Quarter Not Expected in All Regions
Inflation expectations vary widely between the regions of the world. In the Americas, experts expect inflation rates to be high overall, but lower than in the previous quarter. However, there are major differences. This picture applies to all regions in the Americas. In South America in particular, inflation expectations are significantly lower than in the previous quarter, but here inflation expectations had also risen sharply in the previous quarter. Rising inflation expectations can be observed for most regions in Africa, although here, too, developments differ between the regions. Overall, however, inflation expectations for the respective regions have risen sharply compared with the previous quarter. There are also major differences between the regions of Asia: While short-term inflation expectations in many parts of Asia have declined compared with previous quarters, inflation expectations for 2024 and 2026 have recently risen sharply, particularly in East Asia. In Oceania, inflation rates are expected to fall in the medium term, but experts’ assessments here have risen compared with the previous quarter.
In Europe, expectations are at the lowest level worldwide, both for the current year and for the years 2024 and 2026. Although there is a downward trend in expected inflation, the experts do not expect a return to the ECB’s inflation target of below but close to 2% by 2026. There are also major differences in the experts’ inflation expectations within the regions of Europe. For example, the expected inflation rates for 2023 are significantly higher in Eastern Europe than in other parts of the continent.
The chart shows the arithmetic mean of the expected inflation rates in European countries for 2023.
The chart shows the arithmetic mean of the expected inflation rates in European countries for 2024.
The chart shows the arithmetic mean of the expected inflation rates in European countries for the year 2026.
The Economic Experts Survey (EES) is a quarterly survey conducted by the ifo Institute and the Swiss Economic Policy Institute. A total of 1,405 economic experts from 133 countries participated in the survey on inflation from June 14, 2023, to July 2, 2023.
