Pessimism about eurozone, global growth gone too far, suggests Neptune’s Dowey

James Dowey, chief economist at Neptune Investment Management in the UK, said he believes a number of commentators are being overly pessimistic on the state of the global economy.

That is not to say there are no problems, but it is important to focus on the factors that matter more.

For example, he said that it matters more to a portfolio if the investor makes a poor call on emerging markets, which are growing three times the rate of developed markets.

Dowey’s view on the eurozone problems is that the market turmoil is a logical necessity leading to a political solution – which has to be agreed between governments with ofter very different objectives. 

Such negotiation will “go down to the wire”, as this is what is required to induce a lasting political solution. Dowey said his view is the breaking point for the politicians is the breakup of the euro.

What should also be noted, however, is that while closer fiscal union may be the route preferred by the markets in the short to medium term, this is less certain in the long term.

Investors are also being overly negative about the prospects for the eurozone breaking up: the market has only really been pricing this in during the past couple of weeks.

What will be key now is the response of ECB boss Mario Draghi he suggested: “We are in the end game.” 

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