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European Real Estate Quarterly - Q2 2015

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Q1 appears to have brought an abrupt downturn in global growth, with a mix of estimates and preliminary data suggesting that, outside of the three quarters during the heights of the GFC1, Q1 global GDP grew at the slowest rate since 2001. Q1 US GDP growth was barely positive and Q1 Chinese GDP growth dipped to its lowest level since early 2009;

It would be easy to surmise that this is the beginning of a coordinated slowdown, caused by factors common across the world’s major economies;

However, on balance this is rather unlikely. The slowdown in the US and Chinese economies was due to unrelated causes. The US saw export volumes, household spending, and energy sector spending all fall during the quarter due to currency strength, cold weather, oil price effects, and port closures – all likely to have temporary effects. While the Chinese growth decline continues to largely be down to a slowing property market and the transition away from an investment led economy;

Despite the Chinese growth decline being ongoing, the Chinese economy continues to have a rising share of the global economy. This means that the net addition to world GDP from Chinese growth is likely to be just as large as it was pre-GFC;

Source : AEW Europe

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