Eurozone Economy to Continue Growing, Says ECB Chief Economist
Philip Lane, the chief economist of the European Central Bank (ECB), has stated that the eurozone economy is expected to maintain its growth trajectory in the coming years and is unlikely to face a severe or prolonged recession. This statement comes as the 20-nation bloc, which shares the euro as its currency, has experienced stagnant growth over the past three quarters, largely due to a recession in the manufacturing sector. Economists predict that there will be no significant rebound this year, with GDP growth projected to be only marginally positive in 2023.
Lane expressed optimism about the future of the European economy in a podcast published by the ECB. He highlighted that one of the key factors supporting this positive outlook is the fact that the eurozone economy has yet to fully recover to its pre-pandemic levels. The process of catching up to these levels is expected to stimulate growth.
“We’re still below the level of economic activity that we would have expected if the pandemic had not occurred,” Lane explained. “Over time, we would anticipate a gradual convergence towards that trendline.”
Another factor that Lane mentioned is the significant decrease in energy prices compared to the early stages of Russia’s war in Ukraine. He argued that this reduction in energy costs will eventually benefit consumers, resulting in greater disposable income for households.
“In the long run, households should find themselves in a better financial position,” Lane stated.
Despite the ECB’s record pace of interest rate hikes over the past year, aimed at curbing demand and inflation, Lane clarified that the central bank does not intend to push demand into negative territory. The goal is simply to ensure that demand grows at a slower pace than supply.
The ECB’s growth projections for the eurozone economy stand at 0.9% for this year and 1.5% for the next year. However, some economists view these forecasts as overly optimistic.
In conclusion, Philip Lane, the chief economist of the ECB, remains optimistic about the future growth of the eurozone economy. He believes that the catch-up process to pre-pandemic levels and the decrease in energy prices will contribute to this growth. However, there are differing opinions among economists regarding the ECB’s growth projections for the coming years.
Source: Reuters