Global Re-Balancing
You’ve heard of corrections and consolidations. What the global economy now faces is re-balancing, according to Jean-Philippe Cotis, chief economist at the Organization for Economic Cooperation and Development, and the U.S. seems to be getting the short end.
The OECD offers a twice a year economic outlook for its 30 industrialized member nations. Now, in late 2006, it predicts that growth among its members will decelerate to 2.5% next year, down from 3.2% this year.
The OECD expects a slowdown for the U.S. (A major reason is the housing slump.) But the outlook is bright elsewhere. China, India and other fast-growing emerging economies such as Russia are expected to do well. This, plus Europe’s comeback this year, accounts for the “re-balancing” of global demand and output. The years ahead are not expected to resemble the slowdown of 2000, Cotis said. After a lull that may last only the first few months of 2007, the OECD expects the U.S. economy to pick up.
Housing prices have more than doubled in OECD member countries in the past decade. The greatest increases in the first half of 2006 were in Denmark, Sweden, Ireland and France, with Danish prices up 22% compared to the same period of 2005, France up 10.9% while U.S. prices rose 7.3%.
With the U.S. making up only about 46% of the world economy, keeping an eye on investment possibilities abroad makes good sense.