That confidence was in recovery mode as the euro zone debt crisis receded from front pages worldwide, but the European bank stress tests are creating anxiety for some investors.
FORBES: Austerity Does A Lizzie Borden Number On The Recovery
In spite of the signs of improvement overall, IHS Global Insight economist Howard Archer sounded a note of caution for the coming year: "We suspect that the euro zone's recovery could well lose momentum for a time in 2010 before growth starts to gradually pick up again, " he said.
Now the question is whether the momentum of the recovery can continue if the euro zone debt crisis and potential for Europe to slide into a recession remain in the headlines.
In the summer of 2011 the economic recovery had stalled again, the euro-zone debt crisis was at full boil, global stock markets were down (the Dow down 19% from a top in early May).
Meanwhile new data suggested that economies within the euro zone were also on the path the recovery.
In this case, the stalled economic recovery got back on track, the euro-zone debt crisis faded into the background again, the stock market recovered from its summer correction, and although still expected, inflation had not shown up.
When the cyclical recovery does come, it is conceivable that it will be the euro zone that is able to exploit its improved productivity and increased competitiveness to grow in line with its potential.
The recovery was attributable primarily to rebounding manufacturing orders and exports - increasingly outside the Euro Zone.
Danone is bracing for a slow recovery of its European business, highlighting the growing pressure on consumer-product companies from the euro zone's deepening economic malaise.
To be sure, the weak state of the euro-zone economy and the lingering debt crisis in southern Europe may still derail the stock-market recovery, said Jerome Vinerier, a Brussels-based market analyst at IG Markets.
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