Is Europe the 'comeback kid'?

Is Europe the 'comeback kid'?

While the global economy has experienced disappointing growth in 2015, growth in the eurozone has yet to falter, says Standard Life Investments.


In its Weekly Economic Briefing: Global Overview, Standard Life noted that the European Commission’s Economic Sentiment Indicator “hit its highest level” since mid-2011.

According to Standard Life, the lift in sentiment is attributed in part to a depreciated currency, but more importantly as a result of an increase in domestic demand.

“Lower oil prices have helped, but the ECB’s monetary easing is also bearing fruit in terms of easier financial conditions for households and businesses alike,” the report stated.

Unemployment has decreased to 11.3 per cent in February, down 0.5 percentage points over the past year.

“Furthermore, the weaker euro is starting to feed through to inflation.

“The manufacturing [Purchasing Managers’ Indices] survey showed a rise in input prices in the sector for the first time in six months.

“This is being passed through to consumers, with output prices falling at their slowest rate since autumn last year,” the report found.

But while there are notable economic improvements, they should not provide cause for complacency, Standard Life argued.

The European Central Bank should not consider abandoning stimulus measures anytime soon, the report stated.

“To ensure that this cyclical pick-up is durable we need to see even more reform, especially in France and Italy,” the report noted.

“A benign resolution to Greece’s crisis would not hurt either, but that may be too much to ask."

In the US, business investing, exports and consumer spending have slowed – equating to economic growth of about 1 per cent in the first quarter.

According to the European asset manager, the UK is also “chugging along”.

 

Is Europe the 'comeback kid'?
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