What Lurks Beneath the Euro

Earlier this year, the consensus among economists was that the United States would outstrip its advanced-economy rivals. The expected spurt in U.S. growth would be driven by the economic stimulus package described in President Donald Trump’s election campaign. But instead, the most notable positive economic news from the developed countries in 2017 has been coming from Europe.

Last week, the International Monetary Fund revised its growth projections upward for the euro zone. The more favorable outlook extends broadly across member countries, including the Big Four: Germany, France, Italy and Spain. IMF chief economist Maurice Obstfeld described recent developments in the global economy as a “firming recovery.” Growth is also expected to pick up in Asia’s advanced economies, including Japan.

Iceland, which suffered its financial crisis in 2007, has already been dealing with a fresh wave of capital inflows for some time now, leading to concerns about potential overheating. In July, Greece — the most battered of Europe’s crisis countries — was able to tap global financial markets for the first time in years. With a yield of more than 4.6 percent, Greece’s bonds were enthusiastically snapped up by institutional investors.