The new sources of abundant energy in the US will also act as a growth enhancer. The biggest remaining problems are how to put the US budget onto a sustainable long-run footing, and how to manage the exit from extraordinary monetary policy settings.
In Europe, numerous downside risks that were top of mind a year ago have not, in fact, materialised – which is no small achievement. Moreover, there are signs of a modest cyclical upturn in economic activity. That said, those downside risks still exist and the recovery has been described by ECB President Draghi as weak, uneven, fragile and starting from very low levels.