The backdrop for Europe is increasingly positive, but there are risks that warrant caution. In this article, we take a look at the reasons why.
Europe has bounced back so far this year
The European economic recovery is well under way: gross domestic product (GDP) growth in Europe’s major economies was stronger than expected over Q2, notably in Italy and Spain. As European economies are opening up, services activity has recovered sharply, boosted by mobility restrictions easing. This is particularly important for economies such as Spain and Italy that are reliant on the tourism/hospitality industry. Manufacturing activity also continues to expand, powering recovery in the eurozone. Capital Group economist Robert Lind believes Europe’s major economies could regain their pre-pandemic GDP levels earlier than expected.