EY Forecasts European Rebound in 2016

Rising exports, investment and consumption: 2016 looks bright for the euro zone as a “more self-sustaining” recovery takes hold in the region, according to the latest forecasts from EY.

“Heading into 2016, the euro zone recovery is becoming broader-based and more self-sustaining,” EY said in its look-ahead published Thursday.

“After initially being led by consumer spending in 2014-15, conditions are now right for the rebound in capital investment that should underpin a steady (if unspectacular) recovery into the medium term. We expect gross domestic product (GDP) growth of 1.5 percent in 2015, before it picks up to 1.8 percent in 2016 and 2017,” the report, published in collaboration with Oxford Economics, noted.

EY, formerly known as Ernst & Young, perceived several positive factors at work in the 19-country single currency area, a region that has struggled to recover from the global financial crash and its own subsequent sovereign debt crisis.

EY said that “growing exports and rebounding domestic demand mean that capacity constraints are emerging in a number of sectors” and also predicted a boost to loan demand and capital investment, which should “grow by around 2.5 percent a year.” It also predicted that consumption would “remain robust” with consumer spending to grow 1.6 percent in 2016 although it said “the temporary boost from lower energy prices will fade.”

via CNBC

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