Global Market Perspective - global economy

Momentum continuing into 2011

The global economy is now more than 18 months into recovery and most forecasts point to the growth momentum continuing into 2011, although at a decelerating pace. The IMF expects the global economy to grow at a healthy rate of 4.2% in 2011, but it highlights several downside risks relating to global economic imbalances and potential volatility in financial, currency and commodity markets.

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General Trend: Worsening Neutral ImprovingNote: Chinese GDP YOY


A two-speed economy

Economic prospects are likely to be uneven in 2011, which will be reflected in greater divergence in real estate activity and performance. A subdued outlook for most advanced economies contrasts with a relatively strong year for many emerging economies, where over half of the world’s 2011 economic growth is expected to occur. Most advanced economies will still face major adjustments, particularly the need to strengthen household balance sheets, to stabilise and reduce public debt and to repair their financial sectors. As a consequence, economic growth in North America, Western Europe and Japan is projected to be muted, within a range of 1.0-2.5% in 2011. Moreover, ongoing periodic tensions in Europe, caused by the sovereign debt situation, will continue to unnerve the markets. Policy interest rates in most advanced economies are likely to remain low in 2011 and fresh stimulus measures, to boost flagging economic growth and ward off deflationary pressures, could further contribute to asset price inflation.


Asia Pacific - the star performer

In contrast, Asia Pacific is on a stronger foothold and will continue to outpace the world economy, with regional economic growth in 2011 expected to be in the 6-7% range (excluding Japan). Robust growth in both China and India of 8 - 9% will power the rest of the region. Hong Kong, Australia and Indonesia will also maintain healthy rates of expansion. There are some potential bumps in the road however - currency appreciation is a concern which could reduce competitiveness and affect trade and real estate capital flows. Asia Pacific is also facing inflationary pressures, which are pushing up interest rates across the region.

Latin America will continue to build momentum in 2011 with Brazil taking the lead. There are also bright spots in Emerging Europe, notably Poland and Turkey, while Russia is now rebounding. Higher oil prices are driving a recovery in some Middle Eastern economies, and there is increasing business interest in its two regional powerhouses, Egypt and Saudi Arabia.

source: http://www.joneslanglasalle.com/Pages/Global-Market-Perspective-world-real-estate-global-economy.aspx