The eurozone exceeded expectations with strong economic numbers in 2010. After a decline in GDP of 4% in 2009, the eurozone economy is expected to grow by 1.8% in 2010 and is likely to continue on the growth path in 2011 (1.9%). However, the recovery varies by geography. Export-led economies, like Finland, Germany and the Netherlands with close economic ties to emerging economies are expected to enjoy a surge in industrial production which supports consumer confidence. Countries with a higher debt burden, like Ireland and some southern eurozone countries, are expected to remain fragile. The sovereign debt crisis and its management by politicians and the European Central Bank (ECB) may continue to be a major topic in 2011. The eurozone financial system is not out of the woods yet even though the credit markets are slowly showing signs of life. Commercial real estate’s share of banks’ corporate loan book remains far above long-term average.
Source : UBS AG