Eurozone not as adrift as markets claim, says DNCA’s Mériaux
The eurozone's debt levels are among 'the most favourable of the developed countries', says Euro Stars A-rated value investor Jean-Charles Mériaux.
by Atholl Simpson on Jul 12, 2012 at 10:43
Top French boutique manager Jean-Charles Mériaux of DNCA Finance says the eurozone's overall debt levels are actually among the best of the developed nations and the recent European summit is a major step towards resolving the crisis.
Speaking at his firm’s recent investor conference, the head of fund management and Euro Stars A-rated value manager said:
‘The eurozone is not drifting more than other developed countries, on the contrary,’ said Mériaux, who runs the French equity Centifolia fund.
‘When we look at overall debt indicators, the eurozone’s situation is among one of the most favourable of the developed countries.’
‘Looking at total debt, private and public, the regions that show the highest level of debt are of course Japan, with overall debt at 350% of GDP, while the US and the UK have reached levels of around 250% of GDP. In the eurozone total debt currently stands at 150%.’
He then turned to the region’s public debt, stating that in 2012 forecasts predict the eurozone’s public debt levels will reach 87% while the US’ will hit higher levels of around 100%.
Deficit levels also shone a more positive light on the eurozone, said Mériaux, with public deficit levels reaching 2.8% for the eurozone in 2012 while the US and the UK will hit 8% and 7%, respectively.
‘So we see that these austerity policies had a very important effect on reducing the deficit,’ he said. ‘But the price of this, of course, is there has been a rise in unemployment.’
The eurozone’s balanced account are also looking healthier than its developed rivals, said Mériaux, showing a surplus exceeding 1.4% of the GDP, meaning the eurozone is a capital exporter.
‘On the other hand, the US’ balanced account has a deficit of around 3% of GDP, meaning the US has to call on global income to finance their deficit.’
‘The problem of the eurozone, as overall fundamentals are rather good, is one of integration because situations are extremely mixed,’ said Mériaux.
‘That is why we have the feeling that a huge institutional step was taken during the Brussels summit at the end of June.’
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