EU Economy’s Growth Prospects Somewhat Sluggish, BlackRock Says

(Bloomberg) -- The European economy’s growth prospects are “somewhat sluggish” and could get a boost from improvement in China, according to Isabelle Mateos y Lago, chief multi-asset strategist at BlackRock Investment Institute.

“If we do see a turnaround in Chinese growth that will definitely lift Europe’s growth prospects,” Mateos y Lago said in an interview with Bloomberg Television on Monday. “And at that point we would expect long-term rates to start rising again, but it’s not going to be a V-shaped rebound,” she said.

“The reality is growth prospects are somewhat sluggish and we could use some fiscal stimulus,” Mateos y Lago said.

Europe could get some benefit from possible slowing momentum in trade negotiations between the U.S. and China, Mateos y Lago suggested. Chinese officials over the weekend delivered a subtle push-back against some U.S. demands in the talks.

“It’s not necessarily a big deal if we don’t reach closure immediately” on a U.S.-China trade deal, she said in the interview. “And frankly from a European standpoint, you might even a bit cynically say that as long as the U.S. remains entangled in these negotiations with China, at least we shouldn’t expect any intensification of hostilities between the U.S. and Europe.”

The EU is trying to make progress in its own trade talks with the U.S. EU Trade Commissioner Cecilia Malmstrom met with U.S. Trade Representative Robert Lighthizer in Washington last week, as the Trump administration’s threat of punitive automotive tariffs hangs over the bloc. Malmstrom urged President Donald Trump to stop imposing tariffs on the EU if he wants a partner to help the U.S. pressure China to abide by rules governing the global economy.

To contact the reporter on this story: Francine Lacqua in London at flacqua@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Jones Hayden

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