Investment Perspectives: Europe Overview
The series of shocks and 'Black Swan'-type events that have hit financial markets and economies over the past few years have not been unique to Europe.
Yet for a variety of reasons their effects have been stronger here than in other global regions1. For example, Russia’s invasion of Ukraine hit close to home (directly impacting vital supply chains), while Europe’s dependence on Russian gas left it exposed to the spike in global energy prices. The global monetary policy response to high inflation has also impacted Europe more than elsewhere, as higher rates and quantitative tightening have sent shockwaves through the money supply and credit flows1. Combined, these events have dealt a sustained blow to investor sentiment, economic growth, and overall risk appetite.
Given this backdrop, it is not surprising (in our opinion) that of the three global regions covered by Hines Research, Europe is perhaps closest to falling into a mild recession. It may already be there – according to Eurostat, euro area real Gross Domestic Product (GDP) contracted by 0.1%2 in the third quarter.
1 globalEDGE, Recession in Europe: how the Continent's Top 3 Economies are Faring, Cameron Levis, September 28, 2023
2 Eurostat, EuroIndicators, November 14, 2023
