In its first upgrade of a major economic bloc in 10 years, J.P. Morgan Asset Management has upgraded its outlook for the eurozone.
“The outlook for economic growth in the region is the best we’ve seen in a decade,” writes John Bilton, head of the firm’s global multi-asset strategy. “We are encouraged by the pickup in credit formations, employment and business confidence. … We see the current period of above-trend economic growth and positive corporate earnings momentum lasting well into 2018.”
Longer term, the firm expects continued benefits from a stronger financial system and labor market reform.
“Given that the eurozone is operating at an earlier point in the economic cycle than the U.S. and operating with more slack, the pickup in credit formation is a powerful cyclical tailwind,” writes Bilton.
The upgrade itself is modest, moving from 1.25% annual growth over the next 10 to 15 years to 1.5%, but the direction is decisive and the growth is seen as sustainable.