How The World Markets May Affect California’s Housing Market

Weathering the Financial Storm in East Asia

The above quote is from the just-released World Bank East Asia Update, and the storm clouds are still gathering over Asia. Growth in East Asian countries was already slowing before the crisis reached a new level of intensity in the middle of September. Governments around the region have made efforts to boost domestic demand through fiscal stimulus programs and monetary policy actions, but the pace of economic expansion is set to weaken further in 2009. GDP growth estimates are now only 5.4 percent for the region in 2009, as compared to 9 percent in 2007. This reflects the significant deceleration in exports in particular, as well as decreased foreign investment and domestic consumption.

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Given that the three largest trading partners of developing East Asia (U.S., EU and Japan) have fallen into a recession in 2008, export growth from the region is likely to decelerate further and faster, and countries more dependent on exports will be hit hardest. In fact, the recently released Global Economic Prospects Report found that world trade will decrease for the first time since 1982 and will decline by 2.1 percent in … Read more