Signs of stability as inflation cools

Europe has started to turn the corner. Putting a year of stagnation behind it, in Q1 the regional economy grew by 0.3%, emerging from a shallow recession. A flash estimate from Eurostat shows that eurozone inflation also fell to 2.4% annualized in March from 2.6% a month prior, putting conditions on track for the European Central Bank (ECB) to begin cutting interest toward the end of Q2.

Nonetheless, various potential risk factors continue to weigh on Europe. According to the April 2024 Weil European Distress Index, which surveyed 3,750 listed companies, smaller firms and those in industries such as industrials, healthcare, retail, and real estate are struggling. Germany remains the most distressed market, with minimal growth expected in 2024. France is also experiencing above-average distress levels. Meanwhile, Southern European states, such as Italy and Spain, have demonstrated significant reductions in distress levels, and can point to more optimistic growth expectations compared to other European markets.

Supply cuts

Economic growth in the Middle East cooled in 2023 owing to the impact of lower oil prices on Gulf Co-operation Council economies. So far this year, OPEC+ members have extended supply cuts in part due to a slow rebound in demand from China. These restrictions may inhibit growth to an extent and limit governments’ ability to provide fiscal support, increasing the reliance on non-oil sectors to deliver expansion. That said, the Middle East economy is still running ahead of Europe, with most forecasters expecting GDP to rise by upwards of 2% this year.

M&A across EMEA at large had a slower start to the year compared with both 2023 and 2022, but is in line with volumes seen at the beginning of 2021. What’s more, aggregate value was not far off the past year’s trailing quarterly average. Macroeconomic conditions may not be ideal but, all things considered, M&A markets in the region are continuing to deliver noteworthy activity.

Published in association with Datasite, Deal Drivers EMEA provides an in-depth review of M&A activity in Q1 2024, as well as an outlook for the year ahead.

The report is also available on datasite.com.