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RBNZ Forecast Keeps Policy Rates Unchanged In Short-term



The central bank of New Zealand is presumed to keep the interest rates unchanged this week for the next term as policymakers wait for an increase in inflation and higher growth numbers and determine its sustainability.

Meanwhile, economists will see scrutinize the monetary policy on Thursday if the trend changes from being dovish since August, as it decided to sustain the interest rates at a record low until 2020 since the current progress did not meet expectations.

The official cash rate (OCR) of the Reserve Bank of New Zealand will be maintained since November 2016 to be at 1.75 percent based on the Survey from Reuters of 16 economists on the final policy review for the year.

However, two economists anticipate a rate hike in the July quarter of 2019 and four of them assumed an increase in the last quarter while the rest of the months expected not to change in 2019.

The latest announcement from the RBNZ Governor Adrian Orr for the month of September was not too negative at the August meeting but said that an accommodating monetary policy is necessary to raise inflation.

RBNZ is taking solace from the unexpected solid growth for the second quarter and continued on the next three months, close to the midpoint target of 2.0 percent according to analysts while some consider this to be misleading.

German Industrial Orders Boosted by Local demand



The German industrial order grew surprisingly in September boosted by higher demand from domestic and other eurozone clients based on the reports on Tuesday. This also shows that Germany closed the quarter in solid growth.

Contracts that are made locally rose by 0.3 percent after an increase and revised higher by 2.5 percent last month, according to the Fed Statistics Office.

The figure came out stronger than anticipated as analysts forecast of a drop by 0.6 percent.

China’s Exports Rushed Ahead Higher US Tariffs Next Year



Exports came out better-than-expected in Octobers as companies hasten shipment to the United States with higher tariffs by next year, which their top trading partner.

On the other hand, imports slowed down compared to forecasts while Beijing implements counter-measures to higher tariffs of US next year.

The positive readings from China give positive news to boost global demand which has raised concerns to some and the slowest growth of the country since the global financial crisis in the third quarter.

A month has passed since US tariffs on Chinese goods implemented starting September 24, reflecting an important escalation in the of escalating trade war.

However, analysts see the risk of sharp decline in the US demand for Chinese goods in early 2019 while everybody’s attentions are focused on the president of US and China and hopefully come to an agreement on their meeting this month.

Exports in China grew to 15.6 percent last month than a year ago. Customs data shown on Thursday, boosted from 14.5 percent in September, exceeding forecast of analysts by just 11 percent. Nevertheless, Oxford Economics showed a solid growth as it rose astonishingly by 9.9 percent. However, analysts say that export reading will just be transitory given slower export orders for some months.

BoF Report Shows 0.4 Percent Growth but less than the INSEE Forecast



The economy of France is anticipated to rise by 0.4 percent in the fourth quarter, according to the Bank of France on Monday, where the figures show a steady growth.

In the previous month, the INSEE national statistics office anticipate growth 0.4 percent of the French economy in the September quarter, lower than the forecast of 0.5 percent growth.

Economists deem that the second largest economy needs to increase by 0.8 percent in the last quarter after achieving the 1.7 percent rate forecast by the government of Macron for the whole year.


Moreover, the industrial production demonstrated a sluggish growth in October based on the business climate survey on Monday. The primary reason is the automobile business amid updates in the new industry that affects car production.

Japan’s Economic Growth Declined in Q3 Amid Trade Tensions



The Japanese economy dropped more than the expected figure in the third quarter because of natural and lesser imports which can be due to the escalating trade protectionism on offshore demand.

The decline in number indicates the increasing sign of weakness in the global market as we can see China and Europe losing its ground. Germany is anticipated to be released later in the day which also showed a decline in the previous quarter.

The government continues to see that the economy can recover moderately because of typhoons and earthquakes affecting production, as well as consumption. As an economist at Tokai Tokyo Research Center said, “The decline in exports cannot be attributed entirely to the natural disasters”. However, few analysts see that this can’t be because of just a single factor amid the decline in exports and sluggish Chinese demand and effects on increasing global trade friction.

The contraction of 1.2 percent in the July quarter for an annual basis, higher than the median estimate decline of 1.0 percent. Previously, it showed a solid growth of 3.0 percent, according to the reports on Wednesday.

Fall in exports was primarily due to the 1.8 percent, which was the largest drop over three years. The capital expenditure declined by 0.2 percent after its growth of 3.1 percent in April. This has been the first decline in two years based on the reports.

Analysts warn that recovery may be weaker than anticipated and could hamper growth next year when problems on trade conflict worsen.

Japan Exports Recover in October Boosted by US Automobile Imports



Japan exports recovered in a year to October due to high demand in U.S.-bound car shipments after a sudden drop despite the sluggish global demand and unsettled trade war between the US and China, dimming the outlook for export-reliant Japan.

On Monday, the data from the Ministry of Finance showed an increase in exports by 8.2 percent in 12 months to October, less than the 9.0 percent gain forecast from the survey of Reuters.

The export grew after a revision of 1.3 percent annual drop in September due to natural disasters disrupting the international airport, the factory output, goods, and inbound tourism. Data on Gross Domestic Product declined lower than expected in the third quarter, stricken by natural disasters and slower exports.

While the economy is expected to return to growth this quarter as temporary effects from natural disasters fade, Japanese policymakers remain wary about the overall economic impact of global trade friction and slowing external demand.

Although, the momentum is diminishing amid sluggish shipments to Asia because of China’s slowdown, according to the senior economist at SMBC Nikko Securities, Koya Miyamae. “The U.S.-China trade war has not yet had much impact on Japan’s exports, but it warrants attention given that it could cause full-blown effects from next year onwards,” he added.

Exports to China increased to 9.0 percent in the year to October driven by automobiles and plastic raw materials after a drop the month before. Meanwhile, shipments to Asia accounted about more than half of Japan total exports grew by 7.3 percent.

Exports to the US rose by 11.6 percent in the year to October driven by shipments of cars, estimated to 154,085 and grew by 3.0 percent year-on-year and rose for the first time in five months.

The US raised its concern on unfair trade with Japan and China, shipping millions of cars to North America while blocking imports of U.S. autos and farm products.

Trade talks between US and Japan are scheduled in September to protect Japanese auto manufacturers from further tariffs on exports with the US representing about two-thirds of $69 billion annual trade surplus.

Probable Further Decline of Unemployment Rate, says RBA



The Australian unemployment has a chance for a further decline from the current year low of 6.5 without raising the pressure to increase wages, according to the head of the nation’s central bank on Tuesday.

The Reserve Bank of Australia’s Governor Philip Lowe mentioned that despite the jobless rate ranges between the two largest states of New South Wales and Victoria with 4.4 and 4.6 percent, there is not enough momentum to raise the annual wage growth.

The unemployment rate was recorded to be 5.0 percent with annual wage growth of 2.3 percent. There is a chance to reach the 4.5 percent unemployment without augmenting the wage growth “too much”, he added.

Slow Korean Export Growth May Affect International Trades



Exports from South Korea to China has decreased, as well as the shipments of semiconductor that added concerns to the progress of global trade amid the economic conflict between the US and Beijing.

The preliminary trade data from the period of November 1 to 20 has shown a decline of 4.3 percent in exports to China, which has been the first decline outside the holiday since late 2016. It follows a decline for seven consecutive months higher than the 20 percent in the early readings.

Moreover, the growth of chip exports has also declined to 3.5 percent in comparison to the gains estimated to be at 35 percent for every month from January to September of 2018. This implies a faster decline in the global tech sector where Korea has been the main supplier.

The preliminary data did not exactly match the final output to this year with 2017 which may raise a slight concern. In general, exports were recorded to grow by 5.7 percent for the first 20 days of November than last year.

In case the whole-moth figure did not turn our positively, this reflects the status of China’s economy in a poor performance since November that is “worrisome”, according to an economist at Meritz Securities Co. in Seoul, Stephen Lee.

BOJ Dimmed Economic Outlook Needs Stimulus to ReachTarget



The annual core consumer inflation of Japan remained the same in October from September as companies hold price hikes amid the weakened household spending. It also shows that there is not enough momentum to reach the 2 percent target of the central bank.

Moreover, the nation’s core consumer price index, excluding volatile food costs, grew to 1.0 percent in October from 12 months earlier based on the government data on Thursday, which is in line with the median market forecast.

The central bank of Japan might have a hard time in reaching price growth amid the global trade frictions and sluggish Chinese demand that dims the outlook being an export-reliant country and half of the profits were covered by driven by higher energy costs.

For three consecutive months, the inflation was recorded to have grown by 0.4 percent in October based on an index excluding the effect of both fresh food and energy costs.

The chief economist at Norinchukin Research Institute, Takeshi Minami, said that it may take a while to reach the BOJ target.

BOJ Governor Haruhiko Kuroda reassures that they will be patient to keep the massive stimulus program as inflation is still far from the target.

Despite the unexpected side-effects of dropping financial institutions’ profits of almost zero interest rates for years, the central bank will likely keep the stimulus and weakened inflation might affect solid economic growth and lead to higher prices.

Further worsening of negative impact on the stimulus, the BOJ will focus on inflation as the main policy consideration.

China’s Economic Growth Slower Forecast Next Year



The economic growth forecast of China is anticipated to reach 6.6 percent in 2018 and get slower by 6.3 percent next years as the country is faced with obstacles related to trade and structural reform, according to a report from Renmin University.

The forecast from the China Academy of Social Sciences news is still in line with Reuters figure of 73 economists last month amid the worsening tension on the trade war with the United States.

Yet, the country might still struggle even if the trade tension gets settled as described by Renmin University’s School of Economics. Moreover, there will be worsening global trade environment, the decline of export growth and depreciation of the currency.

The GDP growth rose to 6.5 percent year-on-year in the third quarter, which was the slowest growth since 2009. Beijing attempted to boost lending of commercial banks to private companies to minimize financial problems.

Short-term actions will no be an easy strategy to solve downward economic pressure on China Latest policies are expected to prevent downward growth next year although, there is a need for a reform in the structure of the supply.

Next year will be significant to restructure China’s economy to long-term transition which will be a better growth model.

The report says that imports will likely rise to 16.1 percent compared this year’s growth of 6.1 percent with goals of rebalancing China’s foreign trade. Consumer spending is also anticipated to increase by 9 percent next year, surpassing the overall growth.