The market sell-off that started at the beginning of the year has led to increased talk of recession. But the underlying data of most major economies does not point to that potential outcome (at least, not yet). The EU continues to grow slowly, as does the UK. Australia is making the transition from a raw materials exporter to a more balanced economy while Japan meanders slightly forward. Most importantly, China continues to post solid GDP gains (I take an in-depth look at the US in this week’s equity column and conclude there is sufficient underlying strength to maintain a positive rate of growth).    

The ECB released their latest Economic Bulletin, which contained the following assessment of the EU economy:

The economic recovery in the euro area is continuing, largely on the back of dynamic private consumption. More recently, however, the recovery has been partly held back by a slowdown in export growth. The latest indicators are consistent with a broadly unchanged pace of economic growth in the fourth quarter of 2015. Looking ahead, domestic demand should be further supported by the ECB’s monetary policy measures and their favorable impact on financial conditions, as well as by the earlier progress made with fiscal consolidation and structural reforms. Moreover, the renewed fall in the price of oil should provide additional support for households’ real disposable income and corporate profitability and, therefore, private consumption and investment. In addition, the fiscal stance in the euro area is becoming slightly expansionary, reflecting inter alia measures in support of refugees. However, the recovery in the euro area is dampened by subdued growth prospects in emerging markets, volatile financial markets, the necessary balance sheet adjustments in a number of sectors and the sluggish pace of implementation of structural reforms. The risks to the euro area growth outlook remain on the downside and relate in particular to the heightened uncertainties regarding developments in the global economy as well as to broader geopolitical risks.