ECB says Europe’s economy seen ‘far’ from stagflation scenario

“Current expert forecasts remain far from a stagflation scenario,” the ECB said. “However, uncertainty has increased,” leading to a greater range of estimated outcomes.

While growth forecasts were cut and price expectations raised following Russia’s invasion of Ukraine, economic activity is still seen increasing next year and inflation is expected to slow below 2% in the second half of 2023.

Experts on the European economy don’t expect the region to endure stagflation akin to the 1970s and characterized by quickly rising prices amid output that barely rises or even contracts, according to analysis by the European Central Bank.

While growth forecasts were cut and price expectations raised following Russia’s invasion of Ukraine, economic activity is still seen increasing next year and inflation is expected to slow below 2% in the second half of 2023, ECB researchers said Wednesday in a report.