There are 50 countries in Europe, of which only 27 are members of the EU.Markus Schreiber
Got money to invest? In try 'the world's safest economy', John Ibbitson is bearish on investing in Europe:
"Whatever you do, don't look to Europe. The monetary union is at risk of collapsing over Greek debt, Irish debt, Portuguese debt, Spanish debt and Italian debt. The Belgians aren't all that healthy either. Only the boldest investor is willing to bet a buck on Europe."
This analysis makes a fundamental mistake of treating all of Europe as one single market. There are parts of Europe that should, in fact, be quite attractive to investors.
There are 50 countries in Europe, of which only 27 are members of the EU. European countries outside of the E.U. include Norway, whose economy is expected to grow between 2-3 per cent per annum for the next 4 years and Switzerland, which grew by 2.6 per cent in 2010. These two countries along provide attractive opportunities to investors.
Mr. Ibbitson mentions the monetary union -- however, not all the countries of the EU belong to the union. In fact, only 17 of 27 do. Outside of the union we have countries such as the United Kingdom, Sweden and Poland. There is a reasonable case to be made that the U.K. is still risky after their financial crisis. Sweden's economy has grown at an alarmingly fast rate over the past two years, though there are concerns a housing bubble may be forming there. Poland is also doing very well, as it is expected to grow by 4 per cent this year.
A strong case can be made for investing in some of the remaining 17 of 50 countries in Europe. Germany has experienced strong economic growth and is on target to eliminate their (federal) government deficit by 2014, faster than Canada is expected to. While being a member of the euro zone does pose risks, Germany is less risky in other areas than Ontario is, as I argue in a recent Canadian Business editorial.
Naturally, there are risks for these countries being so economically tied to the financial situation of Greece and Ireland. But if that is enough to make investing in those countries a no go, how can Mr. Ibbitson possibly advocate investing in Canada, given our economic ties to the United States?
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