Eurozone crisis may be distracting us from growth issue

ON ASSET ALLOCATION

There is little doubt the protagonist of the world economy continues to be played by the eurozone crisis, however it is worth noting volatility and market weakness have been compounded by lacklustre western data releases.

With this in mind, the developments coming from the eurozone may just be an ugly distraction from the more serious underlying problem which is the strong possibility of a prolonged period of moribund growth in western economies. The positive we can take from this is that better than expected economic data would go a long way to calming global markets. However, the bad news remains that the data is not bullish – employment and sentiment data has been consistently weak, and reports from Asian export firms imply that order books are thin, a sign that western economies continue to destock. ...