The surge in private sector capital spending that took hold last year in most of Europe’s economies should broaden in the coming 18 months as demand picks up and corporate profitability continues to improve, according to Standard & Poor’s latest report published on Wednesday titled “Rising Capital Spending Stimulates Europe’s Recovery.”
“We see capital spending as a major growth source in Europe this year and next, although we expect the euro zone’s core countries will contribute more than those on the periphery given the continuing multispeed recovery in
Europe,” said Jean-Michel Six, Standard & Poor’s chief economist for Europe.
After a strong start in first-quarter 2011, we think euro zone growth will slacken while remaining more sustainable over the next 12 months.
Given Europe’s multispeed recovery, we expect mixed performances between individual countries when it comes to the growth impetus that corporate investment will likely provide. While we see Germany leading the pack, countries in the periphery, including Greece, Portugal, and Spain, will continue to face recessionary pressures.