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- Global Trade to Shrink Says World Bank
- Investing in the World's Cities
- When You Leave America...Leave America at Home
- If the Shoe Hits...
- U.S. Recession Trickle South Effect
- Global 3Q Home Price Data Portrays Dim Year-End Picture
- State-by-State International Activity Research Updated for 2009
- Send Holiday Greetings Year-Round
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Globalization may be on the decline, at least from a world trade view. With U.S., European and Japanese economies all slowing, the World Bank forecasts that global trade will shrink in 2009 by more than 2%. The shift has been abrupt. A USA Today article reports global trade was surging at an annual rate of nearly 10% as recently as 2006. For 2008, the total volume is still expected to grow more than 6%. But, with the Economist Intelligence Unit (EIU) forecasting shrinkage of 29 national economies in 2009, demand for products worldwide will fall off, resulting in the first global economic contraction since WWII. In an interview with Economist Robin Bew, the EIU notes the 2009 contraction is uniquely synchronized in every major market (versus past single market recessions). This, combined with the fact that the emerging markets are simultaneously slowing, paints a very gloomy picture, but no individual market will see a total collapse, like that of the Great Depression. Bew adds that financial policies have been much more aggressive than in the past, which should result in a faster rebound. The USA Today article explores potential increased protectionism and anti-trade measures. With unemployment rising, the new Democratic-controlled Congress may be reluctant to pursue new trade agreements. Bilateral trade deals already on the table between the U.S. and Colombia, Panama and South Korea are in limbo. Public Citizen's Global Trade Watch reports that federal government trade liberalization opponents had a net gain of 28 votes in the House and 6 in the Senate, although the National Foreign Trade Council disputes these figures. Only time will tell.
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Over half the world’s people live in cities, meaning that more than 50% of us reside directly in the midst of a highly globalized economy. By mid-century the share is expected to reach 70%. And while non-city dwellers may feel removed from all this, successes (or failures) of the world's cities (which draw the majority of cross-border investment) directly impact the larger economy. As the U.S. awaits Obama's economic stimulus plan, a new report provides insight into the competitive assets most crucial to the future growth and success of 20 leading cities--including four in the U.S. Cities of Opportunity finds that a concentration of diverse talent and capacity to constantly reinvent best positions these cities to lead the way out of the global recession. The report uses 51 variables to measure and compare competitive assets and suggests how cities can leverage their strengths. In terms of cost competitiveness (attraction to finance and commerce), U.S. cities scored very well with Houston, Chicago and L.A. at the top, and NYC ranking 8th, which is very favorable compared to market competitors London and Hong Kong. Whether assisting investors with U.S. or global locations, this report provides insight on 10 indicators vital to the success of a city and, subseqeunty, its investment attractiveness. At least one U.S. city ranked in the top five in all categories, and the four U.S. cities assumed the top four spots in the Technology IQ/Innovation category. Read the report introduction, or download the full report (3.5MB; 44 pgs.). Get a quick view of the rankings for each of the 10 indicators.
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Ask most any American and they'll say they want to respect the customs of the country they visit, but according to a survey by travel Web site Vayama, over half of travelers (54%) said they typically stick to U.S. customs when traveling abroad, and nearly half (47%) said they did something when traveling outside the U.S. that they later learned was inappropriate behavior in that country. While embarrassing enough for the average person, REALTORS® traveling abroad to pursue business should be particularly careful as bad etiquette can mean lost business. For instance, in Egypt, never refuse coffee or tea, even if you don't drink them as it is considered rude. However, in Kenya, you can expect that no beverages will be served with meals as eating and drinking at the same time is impolite. Avoid giving clocks as gifts in China and red roses in Latvia; both are associated with death. Vayama's etiquette page offers quick "dos and don'ts" on food and drink, gift giving, conversation, dress and more for 50 countries.
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While in Iraq last month, President Bush had to dodge two shoes thrown at him by a reporter during a press conference. Hitting someone with a shoe is considered the supreme insult in Iraq. While hopefully REALTORS® doing international business are not likely to be throwing any shoes, the lesson here is that we don't always know what may be offensive in other cultures. In an Op-Ed column in the 12/16 New York Times, contributor John Kinney writes a tongue-in-cheek article about actions that represent insults. For instance, in France throwing a waffle would convey the same insult as shoes in Iraq. A pair of pants would be the insulting object in Chad. And, in the Buddhist country of Bhutan, where loud or exaggerated gestures would be highly out of place, people throw brightly colored tissue paper, so as not to hurt anyone, and then the thrower immediately picks it up, disposes of it, and apologizes profusely. There's lots of serious resources available to help identify potentially offensive behavior in other cultures, but here's a quick and fun little quiz that identifies a few.
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The U.S. recession's global implications may be felt the strongest by our southern neighbor, Mexico, which has lowered its estimate of inbound foreign direct investment for 2008 to between $17 and $18 billion, down from $23 billion in 2007. The government had previously projected FDI flows of $20 billion for 2008, citing the U.S. recession as the cause of many companies to slow down operations in Mexican factories that export goods to the U.S. About 80% percent of Mexican exports are U.S.-bound and many economists think Mexico is now sliding into its own recession. According to Reuters, the government expects FDI to fall between 10% and 20% in 2009. And the impact is not just on FDI. Some U.S. states are reporting a decrease in Mexicans residing in the region with some analysts pointing to the decline in jobs in the U.S. resulting in a reverse migration pattern. Others say legal Mexican immigrants are simply moving to other states, including North Carolina, Georgia, Idaho and Alaska. A third indicator of the impact of the U.S. economy on Mexico is the drop in remittances to Mexico. August 2008 remittances totaled $1.9 billion, down 12% from August 2007, according to Mexico's Central Bank; the first drop since the bank began tracking remittances in 1996. This was followed by a bump up in October that some attribute to the loss of jobs in the U.S. and Mexican's repatriating their savings before returning home. Mexican president Felipe Calderon is trying to alleviate the impact of the slowdown in the U.S. with a stimulus package that includes spending on infrastructure. Read a press notice outlining five key measures of the Mexican president's economic stimulus program.
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While it will be a month or two before data is compiled for a year-end report, projections based on 3Q 2008 data portrays a bleak picture of the '08 global housing market. The downturn, which began in the U.S. in 2007, precipitated a severe global economic crisis. According the Global Property Guide (GPG), inflation-adjusted house prices fell in 21 of the 29 countries for which Q3 2008 figures were available. In no country was there cause for strong optimism, even in countries which recently saw prices rise. GPG reports that house prices fell by more than 10% in the UK, US and Ireland during the year, and also fell in Austria, Japan, Luxembourg, Israel, Norway, Malta, New Zealand, and Portugal. Although the 3Q figures are not yet available, declines in house prices are expected in key economic countries such France, Italy, Germany, South Korea and Russia. Home price in Europe are anticipated to worsen. The core of the crisis is the U.S. where house prices posting a record 16.6% decline in the 3Q of 2008 versus 3Q 2007 according to the S&P/Case-Shiller house price index. When adjusted for inflation, house prices fell 20.75% for this same period. The impact of a global economy has never been more evident as we watch the world’s property markets move in a synchronized manner, largely driven by the U.S. economy and U.S. interest rates. Country specific details and commentary is available for most countries at the Global Property Guide's investment analysis feature.
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NAR Research has recently updated the State-by-State International Activity Reports. These reports provide economic and demographic data related to international business activity in all 50 U.S. states and the District of Colombia--activity that impacts the local market and REALTOR® potential profitability! With the expansion of international trade, the flow of people across borders has also increased and the demand for real estate in both residential and commercial sectors in conjunction with international transactions has been on the rise. State-specific demographic and economic data are available in each state report on a variety of topics, including, population demographics, language, immigration/naturalization trends, non-immigrant visitors, FDI, state exports and more. Each report is a PDF just under 500KB in size. View or download these reports (Adobe Acrobat Reader required). Review a complete list of international research from NAR.
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It's a new year and a good time to lay out your international marketing business plan for 2009. To stay connected with international clients, customers and colleagues, plan a year's worth of holiday greetings. Greetings sent for more obscure holidays are most likely to be remembered. For example, an ANZAC Day email sent on April 25 to Australian contacts might be a thoughtful surprise. Or, wish colleagues in Brazil a festive Carnival on February 24. Locate country-specific holidays at the Earth Calendar. No time to organize by country? Then pick an international day of note, e.g., Peace One Day, and send greetings to all your contacts around the globe.
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Report compiled by NAR International Operations, narglobe@realtors.org.
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