Is the double dip recession upon us? Has it passed, or are we still waiting for it? And are we likely to see, a corresponding double-drop in the values of commercial property and rental, on serviced offices and shops?
A couple of years ago, governments and their central banks managed to forestall a financial crisis from becoming a fully fledged depression. Record-low interest rates and quantitative easing were used to force-feed the economy with cash. GDP growth in the UK turned positive and we officially came out of recession. However, now people are talking more and more about a double-dip recession. We all know what is meant by double-dip, but do we all know what causes it? The causes for a double-dip recession vary, but often include a slowdown in the demand for goods and services, because of layoffs and spending cutbacks from the previous downturn.
I must say that, on the surface, things are not looking good. Both, the Greek and now the Portuguese economy, are suffering badly, with no prospect of a full bail out in the offing. The corresponding drop in values of commercial property and office rental (both serviced offices and other), will be seen not only in these counties, but all those in geographical and commercial proximity.
Secondly, the austerity programs, cutting spending and raising taxes will take their toll on growth. As will rampant job losses and corresponding drops in spending.
A double-dip (or even triple-dip) recession is a worst-case scenario and the fear that the economy will move back into a deeper and longer recession, makes recovery even more difficult.
To conclude, a double-dip global recession is likely, but not inevitable. Global leading indicators have peaked and are disturbingly reminiscent of 2002. The US provides the most obvious evidence of this peak, with regional business sentiment indicators, consumer confidence and the weekly ECRI leading indicator, all highlighting the likelihood of a sharp slowdown over the next 12 months. So let’s tighten our belts and take a bit of a wait-and-see attitude. It surely can’t do any harm.
Previous Post
Record Breaking Commercial Property Sale?
