Skandia’s head of asset allocation, Rupert Watson, has tentatively called the bottom of the eurozone economy, arguing that the worst may be over in terms of growth.
“While the outlook for the eurozone remains rotten, it is possible that we are past the worst in terms of economic growth,” he says in a note published today.
The eurozone economy has been in or near recession for all of 2012 and its economy is likely to have contracted in the current quarter.
But Watson says Skandia, which is part of Old Mutual Wealth with £67.3 billion (€83.1 billion) in assets, expects positive growth in the second half of 2013 after a flat first half.
“The better performance is likely to be the result of three main factors,” he writes.
These are: less fiscal tightening, especially in Spain and Italy; significant easing in funding conditions thanks to recent moves by the European Central Bank to support peripheral bond markets; and the expected recovery in the global economy providing a boost for exports.
Watson says that last Friday’s stronger than expected German IFO business confidence report suggests that Germany has already bottomed.
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