HONG KONG, Feb. 11, 2011 /PRNewswire-Asia/ -- The Japanese economy has grown modestly over the last year and the Q4 GDP estimate is expected to show a fall from Q3 (where quarter on quarter growth was 1.1%). The fall is likely to be down to softer exports and the expiry of government stimulus programmes. The market consensus is for a contraction of 0.5% in Q4, although we expect growth to resume modestly in Q1 as both the manufacturing and services PMI surveys for January have moved into positive territory.
RBI may be forced to move if inflationary pressures persist
Having raised interest rates at the back end of January for the seventh time since March last year, the Reserve Bank of India (RBI) warned that balance of risks appear, if anything, to be tilting towards stronger inflation and hinted that it was ready to take further action if this did indeed prove to be the case. The next RBI meeting is scheduled for March 17th and unless there is a meaningful shift in sentiment, it would not be unreasonable to expect the authorities to hike the repo rate again, taking it to 6.75%.
US residential construction looking for a way out
Ground breaking activity has been subdued of late, with housing starts falling 9% for single housing units in December (417,000 annualised rate). Indeed, with demand still anaemic - new home sales are still 57% below their 20-year average - and large amounts of distressed properties still coming onto the market (260,000 in January alone), house prices are still falling and therefore, builders are finding it increasing difficult to make house building profitable.
Swedish house price outlook is finely balanced
Looking forward, the outlook for house prices during 2011 is finely balanced. The recent strong performance of the economy should feed through to the labour market and in turn demand for housing.
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