A latest survey of professional forecasters by the European Central Bank showed that inflation and growth in the region will remain low for the year due to oil prices slowdown and the sluggish economic recovery in the Eurozone.
ECB surveyed 61 economists and experts who predicted inflation to come in at 1% in 2014 and 1.4% in 2016. The new figures are down from earlier projections of 1.2% and 1.5% respectively. However, over a five-year term, rates are expected to close in at 1.8% – more or less near the figures ECB predicts.
Consumer prices are also forecasted to grow 0.5% for the year, down from the 0.7% predicted in August. The GDP is expected to grow 1.2% in 2015 and 1.5% in 2016 – which are also below Augusts' predictions. Unemployment was still high at 11.5% in September, which may have contributed to the modifications in the forecast.
"These downward revisions were broad-based, with around 85% of respondents revising down their forecasts for 2014 and 2015, and 60% doing so for 2016," the ECB was quoted by RTT News.
"The downward revisions for 2014 were driven by disappointing figures for GDP growth in the second quarter, as well as persisting low business confidence in some euro area countries, and a more pessimistic outlook for key export markets," the report read.
Inflation in the Eurozone rose slightly in October but the experts said that was only a temporary fluctuation. Investors are still watching the Eurozone and are holding back due to the constant geopolitical tensions around the area.
The ECB has been trying to buoy the economy with interest rate cuts, four-year loans to banks and quantitative easing measures. The central bank expects the measures to pump in $1.244 trillion into the economy and thus boost inflation, money supply and growth, MarketWatch reports.
"What we see is a subdued outlook for inflation and a weakening of the growth momentum and a continuously sluggish momentum in credit dynamics, which all confirm the need for a very accommodative monetary stance for an extended period of time," Benoit Coeure, a member of the ECB's Executive Board was quoted as saying by Reuters.
More recently, a report by ratings firm Moody's stated that it does not expect any significant rebound in the Eurozone area.
"The rating agency now forecasts European GDP to rise by less than 1% and by 1.3% in 2015 and 2016 respectively, after 0.7% in 2014. By 2019, Moody's expects the euro area economy to be 17% or EUR1.7 trillion smaller than it would have been had pre-crisis growth trends been maintained," Moody's said in a statement.