Global Economy Back From the Brink

A recovery takes shape in Europe, and growth picks up in China.

When Mario Draghi, president of the European Central Bank, said on July 26 that he was prepared to do "whatever it takes" to save the euro, he altered the course of the European crisis -- and that of global stock markets. The Euro Stoxx 50 index of European shares gained 15% from the day Draghi made his comment through November 7, more than offsetting what had been a 5% loss for the index in 2012. Overall, foreign stocks gained 10% in 2012, as measured by the MSCI EAFE index, trailing the U.S. market, as measured by Standard & Poor’s 500-stock index, by almost three percentage points.

The threat of catastrophe in Europe is receding. Draghi followed up on his words with action by creating a bond-buying program to act as a backstop against disaster. Greece might still leave the currency union, but its exit likely wouldn't spark the kind of crisis that once seemed possible. The International Monetary Fund forecasts that the economies of Europe will expand by an anemic 0.2% in 2013, better than was expected just months ago.

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Anne Kates Smith
Executive Editor, Kiplinger's Personal Finance

Anne Kates Smith brings Wall Street to Main Street, with decades of experience covering investments and personal finance for real people trying to navigate fast-changing markets, preserve financial security or plan for the future. She oversees the magazine's investing coverage,  authors Kiplinger’s biannual stock-market outlooks and writes the "Your Mind and Your Money" column, a take on behavioral finance and how investors can get out of their own way. Smith began her journalism career as a writer and columnist for USA Today. Prior to joining Kiplinger, she was a senior editor at U.S. News & World Report and a contributing columnist for TheStreet. Smith is a graduate of St. John's College in Annapolis, Md., the third-oldest college in America.