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In this mid-year review of our Global Real Estate Strategic Outlook, we compare our views from March and note any material changes. In general, the trends we expected are unfolding as anticipated. Europe’s efforts to reinvigorate its market with the Long-Term Refinancing Operations (LTRO) at the end of last year and into this year fell short and the region succumbed to the Greek elections in the Spring which injected uncertainty into the markets and is leading to lower economic growth in Europe. Fortunately, recent pronouncements by the ECB and the German Constitutional Court provide some indication of monetary and fiscal coordination for the first time in over two years. Still, the economic conditions in Europe are mired in historically high unemployment in some regions, large level of indebtedness and impending structural reforms to labor markets. These events along with the possible fiscal cliff in the United States will take a toll on global growth.
Offsetting the conditions in Europe, the United States economy continues to exhibit low, yet deliberate, economic growth. Consumer and business spending is stable and the housing market has shown signs of stabilization. In Asia, trade with Europe has receded sharply and dampened growth. However, intra-regional trade and trade with the United States appear resilient and support growth. In addition, China and Germany are working closely on a trade pact which should also maintain growth.