MADRID | In a note to investors, Morgan Stanley analysts let go a few words from the bright side of their view on some of the euro zone countries that have endured the worst part of an altogether bumpy week. And here at The Corner, we cannot help but spread the love.
Experts at Morgan Stanley maintain their estimates for the general GDP of the European Union, which points at a fall this year of 0.3% and a recovery by 1% for 2013. They explained, though, that their expectations for particular countries were now changed.
“In summary, we have a more positive position in the short term regarding core Europe whereas our opinion on the European periphery is less optimistic. In the short term, we are more positive than the consensus in France, but more negative in Spain and Italy.
At the same time, in the medium term we tend to be more positive than the consensus about the ongoing reforms taking place in Spain and Italy but concerned over the long-term risks in France.”
The analysts are confident Spain and Italy will overcome their current travails, then, but said elections in France and Greece and the upcoming ‘referendum’ in Ireland could increase uncertainty and affect investors, companies and even consumers.
“Our attention will be focused in seeing if Ireland or Portugal can return to the capital markets and if they still need further assistance,” the experts remarked.
The report suggested that current oil prices and a rebound of the euro could represent risks for a recovery during the second half of the year. As the European Central Bank approaches the end of its programme on the easing of financial conditions, Morgan Stanley also believes an increase in bond yields across the board will be the consequence, with yield of 10-year Bunds up to 2.5% by mid 2013.