- The European economy is struggling with global trade disruption and political turmoil.
- Central bank officials are responding with another substantial dose of monetary stimulus.
- Despite economic headwinds, company-specific investment opportunities remain.
It’s been another disappointing year for the European economy, even though 2019 is only three quarters done.
The United Kingdom is beset with Brexit uncertainty. Germany is teetering on the verge of recession. Protests in the streets of Paris until recently threatened to destabilise the French government. On top of all that, global disruption from ongoing U.S.-China trade tensions has weighed heavily on Europe’s export-dependent economy.
“I doubt many Europeans will be sad to see 2019 fade into history,” says Capital Group economist Robert Lind. “It’s been a tough year politically, economically and in the broader societal context.”
However, there is reason to think 2020 will be better, Lind explains. There are several important “ifs” in play: If a truce can be negotiated on the global trade front, if central bank stimulus measures do their job and if a Brexit resolution is finally achieved, those events could remove the large cloud of uncertainty that has hampered European economic growth in recent years.