Adding: “The key thing is going to be GDP growth. In the eurozone it is beginning to pick up and increasingly contributions to growth are coming now from private consumption, not net exports. So, what you are looking at is a proper domestic recovery in the eurozone driven by increasing confidence and retail spending and by falling unemployment. This is a proper recovery that we have longed to see in Europe and really hoped to see last year but didn’t for various reasons was delayed but has now arrived. It is not gang busters but it is there.”
This sentiment is shared by UBP chief economist, Patrice Gautry, who said on Monday in an outlook statement: “We believe that the outlook is brighter for developed countries than for their emerging counterparts. This is particularly true for the eurozone, as its stock valuations are decent, its central bank’s policies are accommodative, and its underlying economy is starting to gain traction.”
He added: “Currently, Europe seems to be where the US was three years ago when they launched their quantitative easing programme; this means that European corporate earnings should throw up some good surprises in 2016. This in turn bodes well for consumer discretionary and sectors related to the domestic-cycle recovery.”
Of course there is always the chance that 2016, like 2015 is a year of pauses rather than action, and of course, the ECB has yet to do anything, but it seems clear that sentiment, at least, is a great deal more positive.
