‘Decoupling is inherently illogical’

In my post of March 13th, I had explained why the decoupling theory must be debunked. I seem to be in good company.

The Governor of the Reserve Bank of India (India's Central Bank) commented that "the Decoupling theory is inherently illogical". He adds, "decoupling is a theory which is contextually convenient but inherently illogical. The general analysis now is that it may not be decoupling but a divergence in terms of effect. Hence, you will find that the impact on growth is large in advanced economies while emerging markets escape with softer impact. So there is a differential impact on EMEs and among EMEs. But directionally everybody would have an impact".

I would imagine that directionally, emerging countries would see more people joining the "consuming class" driving up demand for food, energy, and industrial goods. Despite the short term excesses in the real estate markets, one can definitely expect the urbanisation process to continue and maintain an upward bias on real estate prices.