The threat of populist governments, Brexit negotiations and a stagnant economy painted a dark picture for Europe going into 2017. However, half way through the year and investors see a renewed political willingness to reform and a growing economy offering several opportunities ahead.
“This was supposed to be the year of political risk events haunting Europe with all the uncertainty and apprehension that goes with this,” Jan Randolph, director of sovereign risk at IHS Markit, told CNBC via email.
“As it is turning out however, the euro zone economies are surprising in the upside: higher GDP growth is good for stocks generally; but I think that bar the recent U.K. elections; there hasn’t really been any major political upset; again supportive of stocks and slightly net negative for bonds,” he added.
Data released last week showed the euro zone grew at its fastest pace since 2015 in the first quarter of this year. Unemployment and employment data has also improved over the last few quarters. As a result, the European Central Bank updated its forward guidance to include lower risks to economic performance after a monetary policy meeting last Thursday.
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