Political leadership across the globe needs to strengthen if respective economies are to return to an even keel, however, tough times remain ahead for many of the world's economies, a senior investment adviser has said.
Capital Group senior vice president and international adviser Michael Thawley said Western countries have weak governments, either consisting of minority governments or coalitions, and continue to struggle in the fall out from the global financial crisis.
"There is a general loss of public confidence in governments if not in political institutions entirely there's a deep distrust in political leadership if not outright cynicism," Thawley, a former adviser to Australian Prime Minister John Howard, told last month's Morningstar Investment Conference.
He said the financial crash "exposed contradictions" in European Union (EU) structures with monetary union not matched by fiscal union, with overleveraging and loss of competition in the weaker southern European economies.
"There's still a long way to go in dealing with the crisis, there will be problems for years to come," he said.
"Deleveraging still have some ways to go, the markets are probably only as strong as they are because of very loose monetary policy, and flat liquidity from central banks."
Fidelity Worldwide Investment sovereign debt analyst Tristan Cooper said in the wake of last week's failure to secure austerity measures in Greece, "the Eurozone's weakest link just got weaker".
"A Greek Eurozone exit is now firmly on the cards although the probability and timing of such an event is uncertain," Cooper said.
"The irresistible force of German austerity has clashed with the immovable object of Greek popular resistance."
Cooper said the political shift in France following Francois Hollande's victory as the country's new president marks a "turning point in the EU policy debate". It also means growth will have to be re-emphasised.
"Despite professed sympathy for the growth dilemma, markets will punish any government that strays from its fiscal targets. Spain and the Netherlands were recently at the sharp end of the stick," he said.
"This will continue to keep EU governments broadly in line although more frequent market spasms over fiscal anarchy are likely."
AMP Capital Investors head of investment strategy and chief economist Dr Shane Oliver said in the past week the "risk off" tone in global markets has continued.
"German economic data was better than expected with solid gains in factory orders, industrial production and exports. Industrial production elsewhere across Europe was mixed: up in Italy, but down in France and the [United Kingdom]," Oliver said in his weekly economic report.
"Euro-zone March quarter GDP data is likely to show a second quarter of contraction confirming the Euro-zone is back in recession. This is likely to have been led by peripheral countries with Germany stronger."
In terms of an outlook, Oliver said global share markets remain in "a rough patch" which could continue for several months.
According to Thawley, global imbalances have only just begun to be tackled or are only a third or halfway through "at best".
"Governments still have to do a lot before economies will recovery and volatility and risks in the market removed," he added.
"The real concern that we all have is we know what needs to be done to get the economies of the world back on even keel, the question is whether we can find the political leadership that can put together a program that can secure public support and move quickly enough so that growth can return within a reasonable period before major political and social problems take hold."
He said it's important to keep a sense of perspective about the economic climate.
"Governments had been given three years of breathing space by central banks in order to pursue structural reform. The problem is they haven't taken advantage of this [at this] time," he said.
