If the Eurozone Stays Weak, Can the Rest of the World Continue Growing?
Recent data suggest aggregate eurozone economic growth may continue stagnating or weaken -- and some nations are already technically in recession. Yet, some key parallels illustrate this needn't necessarily derail global growth in 2012: History shows even an area as economically large as the eurozone can be weak while the world overall still grows. In 1998, the Asia/Pacific region experienced a severe recession tied to a local financial crisis. At the time, the region accounted for about 20% of global GDP -- similar to the eurozone today -- yet the global economy grew just fine. Although Asia/Pacific GDP fell by more than 1% in 1998, global GDP rose 2.4% -- and even faster in 1999. The global economy was similarly resilient when continental Europe experienced a double-dip recession in the early 1990s.
As the year rolls on, we believe most investors will find these (and similar concerns) outweighed by strong global economic growth, robust corporate earnings and revenues, attractive equity valuations and the like. In our view, this likely leads to nicely positive global market returns through the end of 2012. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.This article constitutes the views, opinions, analyses and commentary of Fisher Investments as of June 2012 and should not be regarded as personal investment advice. No assurances are made Fisher Investments will continue to hold these views, which may change at any time without notice. In addition, no assurances are made regarding the accuracy of any forecast made herein. Past performance is no guarantee of future results. A risk of loss is involved with investments in stock markets.