Positive prospects for investing in Europe – despite Greek woes

Positive prospects for investing in Europe – despite Greek woes

Advisers whose clients have large exposure to Europe should encourage them to take heart from broader positive economic sentiment, despite Greece’s woes, a specialist has said.

Jim Wood-Smith, head of research for Hawksmoor Investment Management, said the International Monetary Fund’s global forecasts were more important than its concerns about Europe.

In its 230-page April 2015 World Economic outlook, the IMF warned: “The medium-term outlook of modest growth and subdued inflation in the euro area is driven largely by crisis legacies, notwithstanding the positive effects of the European Central Bank’s actions.”

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It warned of developments in Greece, where talks between the government and creditors have been ongoing, but also of events in Russia and Ukraine, and their effects on economic confidence.

Mr Wood-Smith said the IMF would normally point out such problems, adding: “It is in this context that we should read its warnings about Greece and global debts. What is much more significant is that it has not downgraded its 3.5 per cent forecast for global economic growth this year.”

This month the Hargreaves Lansdown investor confidence index fell by 11 per cent – its biggest monthly fall since May 2012, though analysts noted there had been a surge of support for European shares.

Adviser view

Guy Stephens, managing director of Bristol-based Rowan Dartington Signature, said: “Any kind of default without a currency devaluation is like having just refuelled the car but then expecting it to continue running when the tank runs dry. It will not solve the problem.”