Many news reports and anecdotes suggest that the housing market is cooling and that investors are participating less actively. However, the construction of new homes has remained near recent highs. In the business sector, investment in new equipment continues to expand at a good clip, boosted by robust sales as well as ongoing replacement and upgrading needs.
And when the global economy picks up, the external imbalances are likely to worsen again. Without fundamental rebalancing, a full-fledged recovery of world economy may be a remote possibility. But rebalancing within a short period of time is no trivial task. It will require more proactive and concerted policy efforts than are currently being made.