A poll of over 70 economists is reported as saying the Eurozone's just announced (yesterday) return to technical recession (two consecutive quarters of declining GDP) will extend to the end of 2012, with 2013 likely to be a 'little better than stagnation' scenario.
The poll also found that a 'firm majority' of all poll respondents think Spain will seek financial aid, and that of 28 respondents who answered a question as to the likely timing of that:
8 think it will happen before the end of 2012;
9 think it will happen in Q1 2013;
8 think it will happen after Q1 2013; and,
3 don't think Spain will seek financial aid.
I suggest you think very hard about how at least 20 of those 28 economists seem to be assessing what is going on in the Eurozone and its near-term and longer-term prospects.
It seems inevitable to me that Spain will seek financial aid. It also seems to me to be a certainty that the longer Spain waits to seek financial assistance, the poorer will be its economic prospects at the time it does that. Spain is an important Eurozone economy, being its fourth largest (of 17 Eurozone countries) after Germany, France and Italy. The weaker Spain's economy at the time it seeks financial aid, the worse off will be the entire Eurozone economy - at least as I see things. Accordingly, for 20 of 28 economists to think Spain won't seek financial aid until sometime in 2013, or not at all, for me seems to be at odds with the proposition that the Eurozone total economy will maintain a 'stagnation' posture without further deterioration in 2013.
You might also want to read Eurozone falls into second recession since 2009. I find it hard to believe that every economist who was polled has not been predicting for months a return to technical recession for the Eurozone.
Topical References:As Europe slips back into recession, little hope for brighter 2013: poll, from The Financial Post, from Reuters, November 15, 2012 - reading time 3 minutes. Also read Eurozone falls into second recession since 2009, from The Financial Post, from Reuters, Robin Emmott and Michelle Martin, November 15, 2012 - reading time 3 minutes.
Ian R. Campbell, FCA, FCBV, is a recognized Canadian business valuation authority who shares his perspective about the economy, mining and the oil & gas industry on each trading day. Ian is also the founder of Stock Research Portal, which provides stock market data, analysis and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. Note: The Commentary and information above is provided ‘AS IS’ and solely for informational purposes, not for trading purposes or advice.
