Rédaction Africa Links 24 with Najoua Hizaoui
Published on 2024-03-13 10:47:44
Euro Zone: Residential Real Estate Market at the Opening of Monetary Normalization
Due to its weight and multiple connections with the real and financial spheres, the residential real estate sector occupies a central place in the economic cycle. The acceleration of real estate prices in the euro zone, initiated in 2014, the year marking the exit from recession of the monetary bloc, intensified after the 2020 lockdown, peaking at nearly 10% on an annual basis in the first quarter of 2022. The tightening of monetary policy by the European Central Bank, unprecedented in its magnitude and speed, seems to have put a stop to this progression, however, with noticeable differences between countries. Economies where the real estate market had better withstood the subprime crisis now appear to be more challenged by the tightening of credit conditions. This is the case for Germany, which does not benefit from the same growth drivers as in the past. The vulnerabilities and risks associated with monetary normalization are not the same as during the previous cycle of interest rate hikes (2006-2008). Household debt in countries formerly known as “peripheral” (Spain, Ireland, Portugal, Greece) has significantly declined, the weight of the construction sector in their economies has decreased, and credit conditions have been tightened. However, the still significant share of variable rate loans in outstanding loans remains a source of vulnerability.
Decline in commodity prices in 2024
Coal, nickel, corn: global prices of industrial and agricultural commodities are expected to continue to decline in 2024, with the exception notably of uranium, copper, aluminum, cocoa, wheat, and soybean meal, according to the CyclOpe index of international markets. In 2023, the index, which aggregates the price variations of the main commodities traded in the world, fell by 14% compared to 2022 (in dollars). “Many of the sharp increases in 2022, such as natural gas, lithium, or maritime freight rates, had created a bubble, and the fate of a bubble is to burst,” commented Philippe Chalmin, an economics professor at Paris-Dauphine University and author of the forecast report. For 2024, “there are so many geopolitical, climatic, and health uncertainties that forecasting remains very difficult on markets that react to all the tensions of the planet of which they are, in the end, the best indicators,” he adds in his report.
“The rise in demand for ‘strategic’ metals is still pending”, except for copper, “destined to become the most strategic of all commodities in the years to come,” notes CyclOpe. As for agricultural products, “2024 will be the year of El Nino,” a climatic phenomenon characterized by abnormally high temperatures along the South Pacific. The main unknown concerns Brazil and its crops (soybeans, corn, sugar, coffee, orange juice).
The tourism sector expected to break its record this year
After three years of post-Covid convalescence, global tourism regained momentum last year, according to the World Tourism Organization (UNWTO), which predicts a record level of activity in 2024 despite international tensions, especially in the Middle East. According to the UN agency based in Madrid, nearly 1.3 billion arrivals of international tourists were recorded in the world in 2023, compared to about 900 million in 2022 and 450 million in 2021. This figure is equivalent to 88% of the 2019 level, the last year before the Covid-19 pandemic, specifies the UNWTO. That year, 1.46 billion international tourists had traveled in the world, a record according to the agency. The recovery in 2023 was driven by strong dynamics in the Middle East, where tourist arrivals exceeded the 2019 figure by 22%, but also in the American continent and Europe, the world’s leading tourist destination, where activity reached 94% of its pre-pandemic level. The recovery, however, was weaker than expected in Asia (65% of the 2019 level), despite the lifting of health restrictions decided a year ago in China, including the end of mandatory quarantines for travelers from abroad, after three years of “zero-Covid” policy. Despite this caveat, “the latest UNWTO data highlight the resilience and rapid rebound of tourism,” with visible consequences on “growth” and “employment,” emphasizes the UNWTO Secretary-General, Zurab Pololikashvili. According to a preliminary estimate, revenues generated by international tourism reached $1.4 trillion last year. The economic contribution of tourism, including air traffic, amounted to 3% of global GDP. This long-awaited recovery by tourism players is expected to continue over the coming months. According to an initial estimate by the UNWTO, tourist arrivals are expected to exceed the 2019 level by 2% this year, setting a new record. According to the UN agency, activity is expected to benefit in particular from the increase in tourism in China thanks to the easing of visa requirements for many countries, including France, Germany, and Italy, and Chinese travel to other parts of the world. Before the pandemic, China was the world’s leading tourist provider, with 154 million Chinese visiting other countries, according to the UNWTO. The Chinese were also the biggest spenders, with $255 billion spent in 2019, accounting for 17% of global tourist spending.
Read the original article(French) on La Presse Tunisie
