The last decade has been a time of worldwide. Banks and investors have been struggling to catch up and meet the demands of a globally interdependent economic climate; while countries such as China flourished and became the world’s largest exporter, and the world inherited more millionaires worldwide than ever before.
These statistics are deceiving however, since the gap between the financial classes is rapidly increasing, almost eliminating the middle class in some countries. Corrupt banking and the fall of the housing market in the U.S. played a large factor in the volatile market, but cannot take full responsibility for the global condition.
Greece’s overly high national debt along with Ireland, Spain, and other Eurozone countries’ failing financial structures sank the European economy deep into the global recession pulling the euro down with it. Even with so much of the world struggling to climb out of the global recession, a handful of countries have managed to maintain a solid economic standing.
Although the housing bubble burst in the U.S. created havoc across financial sectors around the world, it was not the only contributing factor. Many countries’ inability to maintain a Gross Domestic Product (GDP) standing high enough to offset their national debt was another key element. China’s ability to produce products at an extremely low cost due to an almost unlimited work force made them the go to for cheap products and staff outsourcing. China’s ability to provide products and labor at a cheap price, along with their willingness to buy up other countries debt has made them the world’s largest exporter and one of the strongest economies in the world.
This growth has increased the number of millionaires in China moving them into the number 3 ranking for countries with the most millionaires in the world. Speculators have some concerns that with China’s fast economic growth that at some point the bubble will burst, causing them to fall into an even deeper recession than the rest of the world has recently experienced. Concerns follow that since China has bought up so much of the world’s debt, that if China does sink into a recession it could take much of the world with it. Measures need to be taken now to avoid this from happening.
While China moves to become one of the world financial powers, other countries like the U.S. struggle to keep from losing their middle class. New government implemented banking regulations and assistance to home owners along with banking bailouts have assisted in resisting a full blown depression in the U.S.
As investor confidence begins to return, so to do jobs, assisting in the improvement of the unemployment rate. However, long unemployed and near bankrupt labor forces are being forced to take much lower paying jobs while cutting back in order to attempt to make ends meet.
Banks are frugally lending, and consumer spending is spottily increasing. All of these factors make the unemployment figures deceptive and make for a fragile U.S. economy with a slow recovery rate. Interest rates remain low in hopes of aiding banks in finding buyers for the abundance of foreclosure properties that remain on the market, but banks are still not lending enough to make a real impact.
The real recovery will come in the areas of eco-friendly technologies and the United States’ redefining themselves as a world exporter, in order to increase their GDP and put people back into work, making a livable wage.
Countries such as Australia who maintain a solid GDP were able to steer clear of the Global Recession for the time being. In addition to having a high GDP standing, Australia has managed to maintain a growing housing market. Additionally, foreign investors continue to buy property within Australia increasing property values.
Although Australian experienced a reduction in housing prices (in some areas up to ½ the price before the GFC), it is now on the rise and expected to continue to rise as long as Australia continues to experience a stable GDP. This makes Australia one of the most resilient economies in this global climate, making it the best time to invest in Australia. This resiliency and the rising housing and commercial sectors have created an investment opportunity within these real estate sectors. Commercial property will become a sought after asset as businesses grow and communities grow. Investors with foresight will seek out these opportunities and take advantage of the growing needs.
Poland is another country that has avoided the Global Financial Crisis. Poland’s Foreign Investment Department sites three key factors for the country avoiding a recession.
- Infrastructure Improvement – A huge amount of funds received from the European Union after Poland’s joining in 2004, prior to the recession were used to improve infrastructure. Improved infrastructure and completion of projects minimized additional expenditures and eliminated the need for additional taxes as other parts of the world searched to find funding for such projects.
- Middle Class Cash – Internal consumer consumption never stopped, keeping businesses strong and attracting outside investors. Citizens continued to buy Poland made products helping support their economy while other countries found themselves dependent on imported goods.
- Foreign Investment – Poland is able to provide quality products at a lower cost than other Western European countries, making them a viable resource for other countries looking for savings on goods.
For those countries still emerging from the GFC, banks will have to be more stringent with due diligence when providing loans to those looking to purchase property or invest in businesses. These stricter requirements may make it more difficult for some to receive a loan, but this will make for a more secure banking industry in the long run, which will help each country and the world community as a whole. This will help to avoid falling back into a Global Recession or worse.
It is a fine line to be walked, but banks must commit to loans in order to help stimulate the world economy, while also making sure that those loans are secured or as risk free as possible. On the other side of the pendulum, consumers must have jobs in order to qualify for loans and to be able to repay those loans. This means as long as the unemployment rates around the world are high, that even moderate economic improvements will remain fragile.
As the European community gradually climbs out of the Recession, there are some countries such as Spain that remain in need of assistance to help their struggling banking industry. Minimal growth over recent months in France, Germany, and Portugal have aided in the Union’s inching out of recession ahead of projections. But until Spain, Greece and other member countries whose GDP is too low to support repayment of their debt begin to rebound; the recovery statistics will remain unclear. In 2012 members of the European Union completed a successful fiscal consolidation and structural reform to both aid these failing financial economies and increase global confidence in the European markets. This reform also assisted in the European community emerging from recession status.
According the World Bank’s report, “Doing Business”, the current country top 5 ranking countries classified as the Best Place to Start a Business are:
- New Zealand
- Hong Kong SAR, China
The World Bank also states that when it comes to ease of doing business, New Zealand, Canada, and Singapore, in that order, were the top three countries to do business with. The U.S. fell in at number 4 and Australia came in at number 11. Other categories within the report were: Dealing with Construction Permits, Getting Electricity, Registering Property, Obtaining Credit, Protecting Investors, Paying Taxes, Trading across Borders (usually due to regulations, licensing and laws differences in neighboring states), Enforcing Contract, and Resolving Insolvency.
As the world begins to climb out of recession and banks begin to recognize stable economies for investment, prime investment opportunities both in the residential and business sectors will emerge. This makes it the perfect time to invest. In general global economic conditions are gradually improving, even though some areas remain in a fragile state.
But as more and more global confidence within the financial community builds, consumers are finding more expendable income to spend and invest, and even those fragile economies that are on the rise will again become stable. The economic world has entered a new age of international interdependency and countries will need to recognize their impact on the overall world economy, working together to avoid future global recessions. This is being achieved by investing in new technologies and businesses which strengthen each country’s Gross Domestic Product and trade infrastructure.
Original Article Source – CommercialProperty2Sell Blog
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