Europe slowdown ‘worse than investors imagine’
Allianz chief economic adviser says European Central Bank has only limited tools at its disposal to respond to economic weakness
New York — The European economy is cooling more than many investors believe, Mohamed El-Erian, chief economic adviser for Allianz, says, warning that the slowdown poses the biggest risk to the market. In addition, El-Erian said that the European Central Bank has only limited tools at its disposal to respond to economic weakness while European governments are not prepared to respond with spending. “People are underestimating how quickly Europe is slowing,” El-Erian said. The IMF revised down its forecast for eurozone growth to 1.6% in January from 1.9% three months prior, but he thinks even the lowered outlook is overly optimistic. El-Erian, the former CEO of Pimco, the bond investment company owned by Allianz, expects the eurozone will struggle to deliver even 1% growth in GDP in 2019. The potential spillover effects from a cooling in Europe and China helped push the US Federal Reserve to signal in January that its interest rate hikes are on hold for the time being, saying that it w...
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