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US Economy Strengthen, says Barkin

The American economy showed unexpected strength but the robust labor market did not trigger major wage pressures, according to the newest Fed Reserve’s regional President on Monday during his first major speech about monetary policy.

Richmond Fed president Thomas Barkin stated that the US economic health was really strong, showing a higher trend growth with low jobless rate and inflation at target. The statement was made at George Mason University in Fairfax, Virginia and Barkin served as a voting member for the rate-setting committee of the Fed this year.

The Federal Reserve has a unanimous decision whether to approve interest rate hike in March, as there are speculations for another two increases in the current year while more policymakers assumed three hikes.

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Sluggish Q1 Growth Breaks The Longest Growth Since 1991

The largest economy cooled down sharply in the first quarter despite the onset of flu and strikes, which occurs simultaneously for the region that affecting negatively good growth rates.
The annualized growth rate of Germany slowed down to 1.2% from 2.5% in the fourth quarter of 2017, according to the record of the Federal Statistics Office on Tuesday. Although, a sharp slowdown is already anticipated as it did not meet expectations on the U.S. growth rate of 2.3% in the same period.

However, various factors such as the strike of flu and numerous strikes on metals and engineering sectors, which causes slow down and most of the private sectors anticipate the recovery of economic activities in the second quarter or more.

Since 1991, Germany undergoes the longest growth recorded for the fifteenth consecutive quarter, according to the Statistics office. The momentum on investment spending has overshadowed the economic growth in the first three months of the year. On the other hand, exports slid down in the fourth quarter in the previous year.

A calm activity for the first quarter due to the more sickly staff at a higher level in ten years in February in reference to the BKK association of company health-insurance funds in Germany. A recorded of 500,000 workers in the metals and electrical engineering sectors contributed to the warning strikes in the latter weeks of January and early February, as stated by the IG Metall labor union of Germany. They were able to get a solid pay deal from the members.

However, economic indicators reflect that other European economies are also affected by the cold diseases and strikes. Later this Tuesday, the European Union's statistics agency will release the eurozone gross domestic product, which measures the economic output of goods and services. An increase was seen in the first quarter with 1.7% at an annualized rate, which is less than the 2.7% growth in the last quarter of 2017.

NZ Retail Sales Recorded Slowest Growth in Q1

The retail sales volume in New Zealand had expanded during Jan-Mar period but also recorded its slowest rate after five years, this further indicates the possible slackening of economic growth in the following years. On an annual basis, the official data showed that retail sales volume grew by 3 percent on Monday, which also imply a sharp decline versus the 5.4 percent rise in the previous quarter and the weakest growth from July-September 2012.

Sales gained 0.1 percent only based on a quarterly growth, which is lower than the rough estimate of 1 percent increase projected by the economists. Footwear and clothing had decreased by 5.1 percent while motor vehicles are down to 1.1 percent. The figures led to speed-bumps in the economy, whereas, many developed countries in the past years envied but it begins to deal with some headwinds due to weak immigration and expansion in the housing market.

The administration was able to secure strong economic growth because of immigration levels and stable price of dairy products at 3 percent per year despite the slight decline to 2.9 percent in 2017.

New Zealand's new Labour-led government took control in October and pledged to settle the housing crisis in the country along with some plans to improve property investment tax and officially ban foreigners to purchase residential properties in NZ. On Thursday, the expanded government investment declared in the annual budget would likely negate the sluggish consumption expenditure, with the 3.8 percent GDP growth outlook from the Treasury forecast in 2019. In addition to it, the GDP data for the first quarter is scheduled on June 21.

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German’s Strong Economic Upswing Despite Weak Growth in Q1, says Finance Ministry

Germany’s economy had a strong growth amid weak data from the largest economy in Europe earlier in 2018, according to the finance ministry on Tuesday. Moreover, economic output expanded by 0.3 percent in Q1 after the 0.6 percent growth in the last quarter of 2017. The finance ministry also mentioned that the downturn was caused by temporary factors such as ill-health conditions and strikes that affect industrial output alongside the above-average number of public holidays during the quarter.

In addition to it, the ministry stated that industrial orders continued to be at an extremely high level and that export activity at German companies could take advantage of the strong development of the world economy.

Reportedly, the combination of moderate inflation, agreed raise in pensions, robust labor market and wage hikes led to the possible solid income development and continuous support in private consumption. The government of Germany believes that the economy will grow by 2.3 percent this year.

EU Bloc Negotiates with Australia and New Zealand

The European bloc confirmed yesterday the start of free trade negotiations with Australia and New Zealand in order to establish new relations against the increasing trade tensions with the United States. The European Commission represents the 28 EU countries and negotiates about its plans and agreement towards the AU and NZ despite the warnings on opening the EU markets to generate farm products like beef and butter.

According to forecasts from EU, its exports towards Australia and New Zealand may expand by a third in case that trade agreements were finalized. Considering the fact that its trade partnership with the US was suspended by the presidential election victory of Donald Trump, the EU shifted its focus to build allies with open markets and struck agreements with countries on the same mind.

The bloc also deals with the result of steel and aluminum tariffs set by the US and the sanctions they would impose against Iran, which could lead to restriction of certain foreign businesses. The EU closed the deal with Japan, Mexico and Singapore and currently working with the Mercosur bloc of Argentina, Brazil, Paraguay, and Uruguay.

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PBOC Increased the 28-repo rates by 2.85 percent

The People’s Bank of China adjusted their rates higher on the 28-day reverse bond repurchase agreements to keep with the pace on previous increases in tenors for the past two months.

According to the report from the online site of the PBOC, the 28-day reverse repos raised from 2.80 percent to 2.85 percent.

This move was enacted after the U.S. Federal Reserve Bank had also raised their rates on March 21 which signifies that Beijing is keeping up with the global market trends despite all of the financial risks in their homeland.

Moreover, the central bank added 30 billion yuan into money markets, particularly on their 7-day and 28-day rates on Monday, where the seven-day was set at 2.55 percent based on their given statements.

EU’s Malmström Against Trump’s Tariffs

The European Union is trying to convince the countries Canada, Japan, and Mexico to work together against the aggressive trade policies imposed by US President Donald Trump, according to European Commissioner for Trade Cecilia Malmström today.

Malmström further stated that EU is reaching out various countries to form alliances and arrange a trade union who believe in international laws. Last week, the EU announced levying retaliatory tariffs up to €2.8 billion-worth of U.S. exports, which includes peanut butter and motorboats. While Canada, India, Japan, and Mexico will do the same thing. The European Commissioner described Trump’s tariffs on steel and aluminum as “not legitimate” The Swedish Commissioner also cautioned regarding the potential risk towards the global economy.

Both the United States and Europe set up the international policy and organizations to govern trade, but the US broke the rules that is why the EU has to take necessary action, Malmström said.