Europe’s economic recovery has been stubbornly slow, but there are reassuring signs that growth may be finally returning to Europe after nearly a decade of fits and starts. In fact, the European Union recently raised its 2017 economic growth forecast, saying the bloc’s revival is strengthening. Gross domestic product in the 19-country European Monetary Union is expected to grow by 1.7% in 2017 – still modest but improving.
Also, some of the political risks in Europe seem to be ebbing. Emmanuel Macron’s presidential victory in France on a business friendly and pro-EU platform lifted sentiment, and centrist politicians across Europe appear to be beating back a populist backlash against the EU.
Still, Europe faces risks, including high unemployment in some countries and ongoing uncertainties over the United Kingdom’s decision to leave the EU. Those issues, however, have also restrained the share price of some companies, and valuations of select companies in Europe appear relatively attractive. Indeed, the economy and companies are likely to benefit from a weaker U.S. dollar, continued central bank stimulus measures and ultra-low interest rates, all of which could provide a favorable environment for economic growth and potential reward for investors.