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The
economy of the 20-nation bloc sharing the euro has broadly
stagnated for the past three quarters as manufacturing is deep
in recession, and economists see no rebound this year, pointing
to just barely positive GDP growth in 2023.
"There's a lot of reasons to believe the European economy will
grow over the next couple of years," Lane said in a podcast
published by the ECB.
A key argument is that the euro zone economy still has not
caught up with its pre-pandemic trend so this catch up process
should boost growth.
"We're well below the level of the economy we might have
expected (if) the pandemic had not happened," Lane said. "That
kind of trendline we would expect to emerge over time."
Energy prices are sharply lower than in the initial months of
Russia's war in Ukraine and that too will eventually feed
through to consumers, leaving households with greater disposable
income, Lane argued.
"Over time, households should be in a better financial
position," Lane said.
The ECB has been raising interest rates at a record pace for the
past year to cool demand and inflation, but Lane argued that the
ECB did not want to drive demand "deeply negative" and the goal
was merely to make sure it grew more slowly than supply.
The ECB expects the euro zone economy to grow by 0.9% this year
and 1.5% next year, although some economists see these forecasts
as too optimistic.
(Reporting by Balazs Koranyi; Editing by Hugh Lawson)
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