Mr. Gobron, how satisfied are you with the current progress and pace of the European recovery?The European recovery has continued in recent weeks, albeit at a slow pace. Geopolitical risks like the Ukrainian or the Israel/Palestine conflict have started to affect sentiment negatively. We doubt that the recent sanctions imposed against Russia are strong enough to derail the upswing in the euro area. Moreover, the new decisive easing of the ECB and the better global macro environment – here in particular the faster recovery in US - should keep GDP growth in the euro area at positive rates. For 2014 as a whole, we expect real GDP to rise by 1% compared to a drop of 0.4% in 2013. Is the Eurozone debt crisis already a thing of the past? Which major threats could seriously and realistically harm the European recovery?
The euro area has made great progress in overcoming the sovereign debt crisis: Current account imbalances were greatly reduced, financial fragmentation has eased, and most parts of the banking system were successfully recapitalized so that lending conditions have started to ease. Hence, while it would be premature to say that the debt crisis is a ‘thing of the past’, progress is evident.
Yet, there are still risks. The biggest threat we see at present is a stronger-than-expected decline in economic activity and a renewed rise in fiscal deficits. Moreover, while we do not expect a drop into outright deflation, price pressures and inflation expectations should not ease further. Finally, we consider it of key importance that the structural reform process will continue. In this respect, markets are particularly keen to see now if the Italian Prime Minister Renzi will succeed in bringing forward his reform on the so-called ‘bicameralism’.
What was the motivation for Generali Investments to launch the EUROPEAN RECOVERY EQUITY FUND?
As an asset management company of an Italy-originated insurance group, we traditionally have a strong coverage in Southern Europe. About one year ago, we recognized that things are improving in the so-called peripherals, and we wanted to profit from this recovery story. When we launched the GENERALI European Recovery Equity Fund, Generali Group invested 250 million Euro as seed money – and this was more than just a strong commitment: The responsible decision takers on Group level clearly aimed at capital gains for their assets, and are convinced that we will be able to profit from Southern Europe’s recovery with this fund and its investment approach.