European Growth Hits Peak

The latest survey of professional forecasters conducted by the European Central Bank raises the prospect of little or no growth upside in the European region for the foreseeable future. The 57 respondents to the quarterly survey conducted in early January showed no sign of budging from their previously expressed expectation of a 1.7-1.8% growth rate over 2016 and 2017. They also thought growth would stick around 1.7% in the longer term. The absence of an acceleration in growth has significant implications for the resources industry whose cyclical positioning depends on a rising global growth profile. The expected European profile is also the opposite of the ‘uncertainty’ and ‘volatility’ that are dominating the descriptions being proffered by commentators about current economic and financial conditions. There is a strong consensus about the growth outlook and little expectation of variability in future rates of growth among professional forecasters. The temptation to embrace terms like ‘uncertainty’ and ‘volatility’ seems to rise when the outlook is not as favourable as people would like rather than when the strict use of those terms is technically appropriate.