Q1 GDP data released over the past month paint a grim picture, with most economies in the region contracting at a record pace. This is unsurprising given the meltdown in the region’s banking sector at the start of this year. With the worst of the financial crisis apparently behind us, the pace of decline in the real economy should start to slow. Indeed, a slowdown in the rate of de-stocking could even cause a bounce in GDP over the coming months. But a lasting return to positive growth remains dependent on a sustained recovery in the euro-zone and global risk appetite. For now, at least, we remain cautiously pessimistic.