2023-08-18 19:32:01
ECB Chief Economist Philip Lane
In the fight against the price surge in the 20-country community, the ECB has already raised interest rates nine times in a row since the summer of 2022.
(Photo: Reuters)
Frankfurt According to ECB chief economist Philip Lane, the economy in the euro zone will probably continue to grow in the coming years. A deep and prolonged recession is unlikely to materialize, Lane said in a European Central Bank (ECB) podcast released on Friday. The current monetary policy means that the high interest rates have triggered a reduction in demand.
“But we don’t think it creates that kind of pull that leads to a deep recession,” the chief economist said. A deep and sustained economic downturn, which is very damaging, is not to be seen. There are many reasons to believe that the European economy will grow in the coming years.
The recovery from the corona pandemic is still ongoing, Lane said. “We are well below the level of the economy that we would have expected had it not been for the pandemic.”
In addition, the declining energy prices have not yet fully impacted household energy bills. “But over time, lower energy bills will help.” Wages have also increased. “Over time, households should be in a better financial position.”
After a weak winter half-year, the euro zone returned to growth in the second quarter – despite the stagnation in its largest economy, Germany. From April to June, gross domestic product (GDP) increased by 0.3 percent compared to the first quarter. So far, the economists at the ECB are assuming GDP growth of 0.9 percent for the year as a whole. Growth of 1.5 percent is expected for 2024 and 1.6 percent for 2025.
The ECB’s interest rate policy does not intend to push demand deep into negative territory, said its chief economist. “It just has to grow more slowly than supply.” In the fight against the price surge in the 20-country community, the ECB has raised interest rates nine times in a row since the summer of 2022 – most recently by a quarter of a percentage point at the end of July.
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