Bloomberg News reports that with data this week predicted to show the 17-nation bloc is growing again after an unprecedented six quarters of crisis-driven contraction, economists from Barclays to JPMorgan say such stabilisation will restore the region as a prop, if not a powerhouse, for international demand and financial markets.
'We’re not expecting a boom in Europe, but there is a momentum shift, and you’re going to feel it in markets and the world economy,' said Joseph Lupton, a senior global economist at JPMorgan in New York who also has worked at the Federal Reserve. 'There’s a change in perception from when people didn’t see a way out of the crisis to now seeing growth.'
Lupton estimates the euro area accounts for a fifth of global gross domestic product, so a one percentage point home-grown improvement in its economy this year will be enough to boost GDP growth elsewhere by 0.7% point over four quarters.
That will offset the drag of China’s slowdown, with likely winners including nearby trade partners such as the U.K. and eastern European nations, as well as Taiwan, Mexico and Brazil, according to JPMorgan. It forecasts the euro-area economy will grow 1.3% in 2014 after shrinking 0.5 percent this year, with imports expanding 3.7% after two years of declines.
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