RICS Global RE Weekly: China's Economic Forecast

HONG KONG, July 8, 2011 /PRNewswire-Asia/ -- The National Bureau of Statistics release the usual monthly barrage of data on Friday 15th, amongst which will be the closely watched June CPI inflation number; fixed asset investment and industrial production data is also likely to attract interest as markets consider the severity of the slowing in the Chinese economy. Significantly, second quarter GDP is released the same day, which should confirm growth has eased further from the rapid pace seen in 2010. We expect the year on year rate to slow from 9.7% seen in Q1 to around 9% on the back of slowing industrial production, a sustained rise in inflation and lower than expected PMI survey results; the latest readings for the manufacturing PMI showed a notable slowdown in June to 50.9 from 52.0 in May.

Swedish house prices likely to fall further

Swedish Q2 house price data is due Friday 15th. In Q1, prices declined for the first time in over two years (by 1.1%), but were still 13% above their Q1 2009 trough. At least two factors account for the change in trend; tighter monetary policy and stricter mortgage lending regulations. Indeed, the Riksbank has hiked rates by 175 basis points since last July to 2% presently (mortgage lending rates have risen by 150 basis points over the same period, to 4.2%). Coupled with higher borrowing rates has been the blanket 85% cap on mortgage loan-to-value ratios imposed by the Swedish Financial Supervisory Authority (SFSA) in October 2010, after some initial prompting by the central bank.

Canadian household debt continues to rise as corporate debt declines

The coming week sees the release of the Bank of Canada’s (BoC) Senior Loan Officers survey (Q2 2011) on Monday 11th. The survey measures business lending conditions, with Q1 results showing an overall net easing in lending conditions at the headline level and across all sub-categories of commercial, corporate and small business borrowers. Indeed, for commercial and small-business borrowers, the balance of opinion regarding pricelending conditions showed the greatest degree of consensus on easing since the survey began in 1999. A key point in the latest survey is that although business finance is easily obtainable, demand for business loans remains modest. This is reflected in companies’ debt to equity ratio, which shows that non-financial firms continue to deleverage following the recession, falling from 184% right after the recession to 164% in Q1 2011.

Institutional investors can play a vital role in PPP infrastructure projects

RICS has recently published research into the future of Public Private Partnerships (PPPs) examining the impact of the financial crisis on the use of PPPs and how this will affectinfrastructure delivery. The report argues that PPPs will be an essential tool in meeting the estimated US$50 trillion of infrastructure investment needed globally over the next 25 years.

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