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PwC: 2016 beginning of the end of Eurozone crisis

Analysis

The latest “Economy Watch” report published by PwC today, predicts that the G7 will grow at its fastest rate since 2010, led by the United States and the United Kingdom. The professional services firm also says that geopolitics will top the agendas of policymakers this year, commodity prices will remain low for longer and the Eurozone Crisis could start to wind down.

PwC economists’ predictions for the G7, which they expect to grow quicker than 2% in GDP-weighted terms, are in contrast to those made regarding the emerging economies of the E7, which the report notes will grow slower than their trend rate, although still faster than the G7.

The report also states that three geopolitical issues will dominate policymakers’ agendas this year: The migrant crisis in Europe; the international community’s response to the Middle East crisis; and the U.K. referendum on whether it will remain in the EU.

Commodity prices are also expected to remain lower for longer periods this year – an upbeat prediction for businesses and households but less so for countries that rely on commodity exports, PwC analysts say.

With regard to the Eurozone crisis, PwC analysts predict a potential flare up of the Greek crisis that could spread to other countries. This effect could be mitigated in part by the speedier growth of peripheral economies and spell the beginning of the end for the Eurozone financial crisis. The report added that Eurozone GDP could expand by approximately 1.6% this year -  its fastest growth rate since 2011.

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