“The much-maligned peripheral economies of the euro zone are showing some encouraging signs, leading to talkof a revaluation which would have seemed optimistic for most of last year.
Greece, Ireland, Portugal and Spain all reported current account surpluses in late 2012, which has led someto suggest that the worst of the crisis is coming to a close.
There are fewer economists who, like Jonathan Loynes of Capital Economics, believe that Greece is “likely” to exit the euro zone and the crisis will “re-escalate”this year.
“It’s a different scale of problem. We do not have the same potential for Europe to generate systemic risk we had a year ago,” Stephane Deo, head of European economic research at UBS, told CNBC.
“The euro breakup call has been proved entirely wrong. The economy is recovering. European imbalances have been reduced massively, half of the GDP of Europe is now in countries which are able to stabilize their debt-to-GDP ratio.”
He argued that there is a case for further re-rating of peripheral euro zone countries, if growth improves unexpectedly or Spain goes into the European Central Bank’s new bailout-lite,the Outright Monetary Transactions (OMTs) program, earlier than forecast….”
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