Europe's economy is finally emerging from the Global Financial Crisis, says a visiting strategist for BNP Paribas Investment Partners.

But risks remain around a populist political backlash, with all eyes on the French presidential election later this month.

Data in the last few weeks has indicated some acceleration is occurring in the EuroZone economy, said London based investment strategist Daniel Morris.

"Europe's recovery has been delayed compared to the US," he said. "It is something we've been waiting for and we are finally starting to see."


March data for the closely watched Purchasing Manager Indices - a survey which measures manufacturing output - was the strongest it has been in six years.

So economic growth was looking good and there were signs of inflation returning to the 19-country eurozone, Morris said.

While growth and inflation were not yet strong enough for the European Central Bank (ECB) to lift interests rates there were signs it was starting to tighten monetary policy, particularly as the US Federal Reserve listed its rates.

There were also plans in place for the ECB to start "tapering" its bond-buying (quantitative easing) programme, he said.

The big risk for investors now was around politics and the rise of populist anti-Europe candidates in elections.

France goes to the polls on April 23 with extreme right-wing National Front candidate Marine Le Pen still in the running.

She grabbed attention late last year when polls had her in second place, which would have put her into a head-to-head race in a second-round vote.

Europe's recovery has been delayed compared to the US.


Markets were still pricing in some risk of a Le Pen win, Morris said.

Recent polls showed it was very unlikely she could win in a head-to-head race with either of the mainstream political candidates from the Left or Right.

"If you look at the polls for elections coming up - both Germany and France - it does seem that we are going to get candidates that are not populist and are probably more pro-Europe," Morris said.

However, after last year's Brexit result in the UK and Donald Trump's election in the US markets were reluctant to rule anything out, he said.

And even if the French election result follows the polls there are other challenges on the horizon.

Italy still had serious issues, Morris said.

"They've got a fairly significant budget deficit and they've got rising debt levels," he said. "So it's not a particularly good combination when you then add rising interest rates because of changes in the ECB's policies."

Italy is likely to have a general election next year, although it could potentially go to the polls earlier, Morris said.

The "Brexit" of the UK from the European Union was also a factor. Long and possibly complex negotiations would be playing out over the next two years with the potential to rattle markets.

But broadly, Morris said, "the underlying economic data does look good."