Against All Odds

Image source: GoodStudio Shutterstock

What's going on?

Economists at investment bank Goldman Sachs no longer see a recession hitting Europe, according to news out on Tuesday.

What does this mean?

Only a few months ago, gloomy economic fortune-tellers were predicting a long spell of penny-pinching pain for Europe. But good old Goldmans gone and started 2023 with a sunny, contrarian take, saying that things mightnt get so grim after all. The firm thinks the double blessing of falling gas prices (thanks, balmy January) and a reopened China will give Europe the leg-up it needs, helping the region dodge a recession and grow its economy by 0.6% this year. And while that will probably mean the European Central Banks rate-hiking antics continue for a while, at least the region’s long list of negatives looks a whole lot shorter.

Why should I care?

For markets: Happily ever after.
If Goldmans right, Europe could finish the year on a pretty strong footing. Picture this: its December 2023, inflations under control, and interest rates are sitting at a tolerable 3 to 4%. Now Europes shipping exports to China by the boatload again, and the bloc is managing to wean itself off Russian fossil fuels. Admittedly, this is a best-case scenario, but it’s not inconceivable so if Goldmans right, European stocks could be a cheap and clever bet.

For you personally: One step ahead.
Of all 2022s surprises, one in particular stands out: European gas prices ending the year lower than they were before war broke out. And if Europe does avoid a recession, thatll be yet another turn up for the books. The point is this: going against the crowd won’t always yield results, but surprises crop up more often than you think and bearing that in mind can help keep your portfolio positioned for the future, not stuck in the past.

Originally posted as part of the Finimize daily email.

The top 2 financial news stories in 3 minutes. Join over one million Finimizers

Read next

Getting Chatty

Sign up to Finimize

Get the two most important global financial news stories each day. Sent at midnight UK time.

Get started with one email a day

The top financial news stories in 3 minutes.