Undervalued: Why there is room for optimism in the eurozone

Recent research from the OECD paints a troubled picture of the eurozone. In its May 2013 Economic Outlook report, the organisation forecast a 0.6% contraction in GDP. Blaming continued austerity policies, weak business confidence and tight credit conditions, it warns that ‘protracted weakness could evolve into stagnation with negative implications for the global economy.’ We believe the region’s recovery will be stronger than predicted for three reasons. First, the balance of payments crisis is all but over; second, financial conditions in the core are easing; and lastly, austerity poli...