Global Banks Make Predictions for 2011

A recent article in the Vancouver Sun showcased the opinions of many of the largest financial institutions in the world in regard to their predictions for the economy next year. Here is a look at what some of them had to say.

UBS

UBS maintains that the world economy is on track toward a recovery, citing the fact that it grew an estimated 4.1 percent in 2010. The bank predicts that global growth will slow down a bit in 2011 to 3.7% and then pick up slightly to 3.8% in 2012, with Japan having the slowest growth rate in 2011. The bank also predicts a slow down in emerging economies.

“The lingering constraints of the credit crisis and balance sheet repair, combined with a less-pronounced inventory contribution, suggest that the world economy is unlikely to reduce much of the spare capacity built up during the recession,” said the bank in the article.

Bank of America-Merrill Lynch

Bank of America-Merrill Lynch states that the gap between advanced and emerging economies will be a significant factor next year.

“While economic fundamentals are positive in most emerging markets, banking and real estate crises have created deep and persistent output gaps in the Big Three – the U.S., Japan and Europe. We expect trend-like growth in most economies in the year ahead. Such growth is essential to avoiding overheating in the emerging markets, but it means a very slow healing process in the Big Three,” the bank said in the article.

Due to the gap, the bank predicts an ongoing policy split. Furthermore, the bank predicts that the unbalanced global economy will create several risks including trade and currency tensions, premature policy exit and commodity and asset market bubbles.

Deutsche Bank

Deutsche Bank predicts that the global economy will bounce back and predicts a growth of nearly 4% in 2011, with slightly faster growth in 2010.

“This overall pattern combines two very different pictures: one for economies that have been hit hard by the effects of deflating real estate bubbles and sovereign debt crises and a second for those that suffered more modestly and indirectly from spillovers as global activity declined.”

The bank also predicted that global inflation will pick up modestly, but will continue to be at or below average in Europe, the United States and Japan while remaining elevated in emerging markets. Overall, the bank predicts a 6% global inflation rate in these markets.

Morgan Stanley

Morgan Stanley believes external imbalances are shrinking as surplus countries engage in the transition from being export-led to consumption-led while deficit countries tend to move in the other direction.

“Reflation: During the rebalancing process, the G3 central banks will likely keep policy very expansionary, which should support the ongoing reflation of the global economy and financial markets. Many emerging market central banks will likely raise rates, but won’t be overly aggressive.”

The bank also foresees reconciliation as governments address the needs of bondholders versus stakeholders.

Foreign Investors Test U.S. Markets

From 2005 through 2008, foreign buyers claimed at least $100 billion of US commercial property, a significant sum, according to Real Capital Analytics as noted in an AFIRE News article. In recent years, foreign investment in United States real has accounted for less than 10 percent of all property acquisitions. However, foreign investors are starting to take interest in the U.S. again though origins of the capital are changing and actual acquisitions so far have trended on the low side.

Through third quarter of 2009, acquisitions by non-U.S. investors have totaled just $2.1 billion. However, the market share of foreign buyers is up slightly overall, as a percentage of all U.S. acquisitions, and with notably higher investment for office, hotel and apartment sectors.

Foreign Investment into U.S.

How Many Are Like You In A World 0f 100 People?

If the world were a village of 100 people, where would you fit in? As we tend to group with others like ourselves, it’s easy to feel very centric. REALTORS® doing business with global clients and customers will be well served to remember that most of us are a minority in the global view, regardless of our faith, country of origin, and other variables. See where you fit in if the world was a village of 100 people.

Most of us are a minority in the global view, regardless of our faith, country of origin and other criteria. But in our own business and personal worlds it’s easy to lose sight of that.  The World Citizen Guide puts the world population in perspective when it reduces the world to 100 people.  REALTORS® doing business with global clients and customers will benefit by taking a look at where they fit in.



Blue Aisle Special: Commercial Real Estate

If you are an investor who is looking for a great bargain, you might want to set your sights upon commercial real estate. According to experts, an increasing number of investors are deciding to move their capital into real estate. Furthermore, they expect this trend to continue over the next couple of years as the economy continues to take its toll on the commercial real estate sector.

“A lot of the investors I’m hearing about are now thinking of shifting their focus to real estate, because that’s where they see the opportunities,: said Mark Shapiro, who is the head of global restructuring and finance and Barclays, while speaking in New York at the Reuters Restructuring Summit. “That’s probably where you’re going to see capital shifting.”

Although most experts agree that the residential real estate market has likely hit bottom at this point, the commercial real estate market has not quite hit this point yet. Rather, many developers and property owners believe the majority of commercial real estate defaults will occur over the next few years as banks become increasingly less willing to provide new financing and to roll over their debts. Understandably, policymakers are concerned by the implications of a commercial real estate meltdown.

“Commercial real estate remains a very serious problem,” said Ben Bernanke, who is the Federal Reserve Chairman, while addressing the House Financial Services Committee recently. “We are concerned, both because the fundamentals are weakening and because the financing situation is bad (and) could provide a source of a lot of stress, particularly for small and regional banks that have a very heavy concentration in commercial real estate.”

Bernanke’s concerns appear to be in line with the comments that were previously made by Dennis Lockhart, who is the president of the Federal Reserve Bank of Atlanta, as he had stated that the commercial real estate market was his greatest concern when he expressed “measured optimism” for an economic recovery in the United States.

“Lots of commercial construction is still in process, and until growth of supply stops, the industry statistics will continue to deteriorate,” said Lockhart.

Although there are still many concerns surrounding the future of the commercial real estate market, the bright side is that the struggling market will provide plenty of opportunities for investors who are willing to take a risk on purchasing these properties. So, if you are looking for a great investment opportunity, it looks like you will likely have plenty of options to select from over the next couple of years.

Eric Bramlett is the broker & co-owner of One Source Realty, a boutique Austin real estate firm. Eric manages a number of websites, including his Steiner Ranch real estate site, and actively writes an Austin blog.

Asia Leads Global Recovery

Asian countries are leading recovery of the global property market, primarily through government stimulus plans, India’s Economic Times reports. The strengthening markets include China, Singapore, India and Vietnam. China appears to be the region leader. Its government-dominated, top-down economy is surging after Chinese banks issued more than $1 trillion in loans in the first half of 2009, plus a nearly $600 billion government stimulus program. Singapore, India, Vietnam and a number of other Asian markets are also strengthening.

In past recessions, the United States has led global recovery.  “The economic center of gravity has been shifting for some time, but this recession marks a turning point,” said Neal Soss, chief economist for Credit Suisse in New York. “It’s Asia that’s lifting the world, rather than the U.S., and that’s never happened before.” He adds that vigorous rebounds, particularly in East Asia, suggest U.S. imports and exports will soon improve.

Globalization of Retail Industry

Retailers from all sectors continued to expand their global footprint during 2008 despite the global economic downturn, reports CB Richard Ellis in CBRE’s 2009 study. The report surveyed 280 leading global retailers in 67 countries.

Key findings include:

  • The United Kingdom remains the country which attracts the most international retailers, with 58 percent of non-UK retailers in the survey present in the country.
  • Luxury retailers and those from the clothing/footwear sectors are significantly more international than retailers from other sectors.
  • London is the dominant retail city, followed by Paris, New York and Dubai.
  • Retailers from all sectors continued to expand their global footprint an average 12 percent during 2008 despite the global economic downturn.
  • Over 40% percent of all new openings during 2008 were outside the home region of the retailer concerned.

The geographic regions that benefited most from this global expansion process were the emerging markets, with Middle Eastern, Asian and Eastern European countries dominating the list of new openings.

Download full CBRE report or read about Shopping Capitals of the World at Forbes.com.

New Zealand Is Best Destination for British Expats

British expatriates named New Zealand the most preferable country for relocation, due to the combination of affordable real estate prices, agreeable tax system, and natural environment. Of the 2,000 Britons surveyed, 86 percent say their lives are better than before they moved and 92 percent say they are happier, despite the poor economy.

New Zealand ranked ahead of Canada, Australia, France, the United Arab Emirates, Portugal, Spain, South Africa, China and the United States in the survey conducted by NatWest International, a global banking firm.

Chinese Language Skills Will Help Businesses Navigate the Chinese Market

The U.S.-China Language Engagement Act H.R. 2313 is designed to help businesses overcome the obstacles of understanding and navigating the Chinese market.   The bill, which U.S .Rep. Susan David (D-Calif.) introduced in May, would give schools competitive grants to:

1) create, expand or enhance Chinese language and cultural classes

2) broaden technology options to link American and Chinese schools online.

Developing Chinese language skills can help businesses tap into the growing opportunities in the trade with China. Since 2000, U.S. exports to China increased more than 300%. China is the world’s second largest economy based on domestic purchasing power parity.  And its booming economy is a growing export opportunity for U.S. businesses.

Track H.R. 2313′s progress.

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