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Far East economies set to rise

Economies in the Far East are set for the greatest economic growth in the developed world next year, according to forecasts by the International Monetary Fund

Hong Kong, where practices like Wilkinson Eyre and Zaha Hadid Architects have outposts, will lead the way with a GDP increase of 4.4 per cent in 2014, according to the IMF.

The Taiwan Province of China is predicted to have the second best year with growth of 3.8 per cent, followed by Korea at 3.7 per cent and Singapore 3.4 per cent.

But while much of Asia continues to blossom next year, the picture is far less rosy in Europe.

Cyprus’s economy is forecast to shrink by 3.9 per cent and Slovenia’s by 1.4 per cent, with San Marino’s flat.

Spain, Greece, Portugal, France, Italy and the Netherlands will see less than 1 per cent growth in 2014, according to the IMF.

Africa is expected to see dramatic growth in places next year, with South Sudan topping the IMF’s growth chart at a forecast 43 per cent – albeit it after shrinking by 48 per cent in 2012.

Mongolia, Sierra Leonne, Chad and the Democratic Republic of Congo are expected to see in excess of 10 per cent growth next year, as are Libya and Turkmenistan.

Overall, however, the IMF said the developed world was beginning to recover from the economic downturn, while developing economies were seeing their growth slow.

Olivier Blanchard, director of the IMF’s research department, said: ‘These two evolutions – strengthening recovery in advanced economies and a slowdown in emerging market economies – are leading to tensions.

‘In particular, emerging market economies are facing the challenge of slowing growth in the context of global financial conditions.’

Simon Rawlinson, Head of Strategic Research at EC Harris:

‘This week’s IMF report has upgraded 2013 and 2014 forecasts for the UK, whilst simultaneously cutting global forecasts by about 10% - from 3.2 per cent to 2.9 per cent for 2013. Given ambiguous results from the RIBA Future Trends survey, evidence of growing momentum in the UK will be welcome to designers and contractors – albeit most of the construction growth is currently being driven by the housing markets and by infrastructure.

The road to recovery will continue to be bumpy, wherever you work

‘Looking beyond these shores, the IMF highlights two developments since their last report in June 2013.  One is the clear sign of a managed slowdown in the rate of growth in the Chinese Economy, and the second being the ripples caused by suggestions that the US might start to taper its QE programme.  The implications of the slowdown of growth in china include a wider impact on the BRICs and other economies with a dependence on Chinese markets.  Another watch-out for the built environment industries is an acceleration of the transition from an investment to consumption economy – which implies less construction – buildings as well as infrastructure.  Realisation that the US QE programme might be coming to an end had widespread economic impacts that went well beyond stock-market chaos.  Very large capital flows out of emerging economies resulted in significant devaluations of Asian currencies.  Whilst the result of these adjustments paradoxically made Asian economies more competitive, the events point to greater instability in Asian markets and the greater potential for over-adjustment in markets in future crises.

‘So does the report point to improving prospects for designers and their clients?  In balance, probably not.  Growth in the US and a few European countries will be offset by a slight slowdown in Asia, which may reduce the momentum behind major projects.  Furthermore, the prospect of greater uncertainty related to the end of economic special measures means that the road to recovery will continue to be bumpy, wherever you work’

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