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- February 2012: Vol. 4 No. 2

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The Contagion Effect: Will Major Problems Plaguing Europe and the United States Infect Asia Pacific Property Markets?

by Mard Naman

Ongoing sovereign debt issues in Europe and the United States continue to threaten global financial security and growth.  With a recession in Europe seemingly inevitable and the U.S. economy still fragile and barely growing, Asia Pacific property market investors have cause for alarm.  In this global economy, what contagion effect might be in store for them in 2012 and beyond?

There is much talk these days of “contagion,” that the enormous sovereign debt crisis in the euro zone and major problems in the U.S. economy could “spread” to the rest of the world, “infecting” economies and property markets and causing a global recession or even depression. In late November 2011, Canadian finance minister Jim Flaherty was quoted by Bloomberg News, saying, “Ongoing uncertainty stemming from the European sovereign and banking crisis is leading to broader contagion outside Europe and global credit markets.”

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