Euro area GDP rebounds

A sluggish US economic outlook and further casualties from the US subprime crisis continue to foster concerns amongst investors. However macro economic data suggests there is still hope for a relatively positive outlook in Europe. Euro area GDP growth rebounded in the third quarter of this year and came in slightly ahead of expectations. Real GDP grew by 0.7% quarter on quarter, ahead of last quarter’s weaker 0.3% gain and annual GDP growth has so far averaged 2.8% this year, only 10 basis points below the 2.9% recorded in 2006.

Consensus forecasts softer Euro area GDP growth rates for 2008, however Roger Guy and Guillaume Rambourg, co-managers of Gartmore’s European Selected Opportunities Fund and Gartmore’s SICAV Continental European Fund, comment that providing global growth remains strong, there are still plenty of reasons to remain positive about European equities.

“Our base case scenario is that global GDP growth in 2008 will be between 3.5% and 4.0%. In such an environment, we are confident that European companies will deliver strong earnings, especially after share buy-backs from the likes of Nestle, Daimler or Siemens are taken into account”.

In October, the European Commission's economic sentiment indicator weakened in both the European Union and the eurozone, however it remained above its long-term average in both areas. Among the larger countries in the eurozone, industry and consumer confidence in Germany fared much better than the UK. The Gartmore European Selected Opportunities Fund and the Gartmore SICAV Continental European Fund are both overweight versus their respective benchmarks in Germany.

The Gartmore European Selected Opportunities Fund and the Gartmore SICAV Continental European Fund are both rated AAA by Standard & Poor’s.