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New Zealand GDP Better Than Expected

New Zealand’s economy shrunk by -0.9% in the three months ending 2008 after economists had expected this south-Pacific country’s GDP to contract by more. The move marks the fourth straight quarter that the island-nation has seen its annual output decrease.

Since July the central bank has slashed interest rates by 5.25% to 3.0% in an effort to provide short-term liquidity to businesses and financial markets in order to stave off the effects of the global recession.

Now, in its fourth straight quarter of contraction, the New Zealand economy has shed thousands of job. In the final three months of 2008, their unemployment rate jumped 0.4 percentage points to 4.6%, the highest level since 2003. Their Treasury department predicts that it will get worse. They have forecast that by early 2010 the jobless rate may jump to an 11-year high of 7.2%.

Yesterday, the IMF released a report stating that New Zealand’s economy would contract a total of 2.0% in 2009 after 2008 experienced a slight 0.1% decrease. One key “vulnerability” that is likely to keep the country under water is the extensive amount of short-term borrowing from abroad, the IMF said.

This final period of the year saw the country’s currency depreciate by as much as -20.95%, but ended the quarter down only 10.15%.

– LG

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Filed under: Global Economics, World, , , , , , , , , , , , , , , , ,

Stimulus? U.S. to Buy Chinese Condoms, Ending Alabama Jobs

“Call it a condom conundrum.

At a time when the federal government is spending billions of stimulus dollars to stem the tide of U.S. layoffs, should that same government put even more Americans out of work by buying cheaper foreign products?

In this case, Chinese condoms…

Filed under: Economics, Politics, , , , , , , , , , , , , , ,

CHINA’S TRADE SURPLUS PLUMMETS 87.6%

Chinese trade with the rest of the world suffered heavily in February. Its surplus plummeted 87.6% to a mere $4.84 billion from $39.11 billion. The realized value substantially underscores expectations that the figure would print at $28.30 billion. Surrounding this event may be questions regarding the health of the world’s third-largest economy.

In the year through the month, exports from the Asian nation fell 25.7%; imports shipped to the country fell 24.1%. The sudden developments will likely add pressure to the Chinese government to add to the 4 trillion Yuan ($585 billion) stimulus announced in October. China’s commerce minister stated yesterday that the U.S.’ largest foreign creditor would be eliminating export taxes as part of the additions to the stimulus. He noted that the country would “use all possible measures to ensure the stable growth of our exports and prevent a large drop in external demand.” At this point it is questionable whether the communist nation’s domestic policies will aid the troubling glove in combating their lack of appetite for Chinese made goods.

The U.S. Dollar rallied on the news. Against the Euro, the greenback jumped from 1.2727 to 1.2656, or 71 pips in the 10 minutes following the release. Against the Australian Dollar, the greenback jumped from 0.6475 to 0.6427, or 52 pips.

– LG

China's Trade Surplus; Source: Bloomberg, Prepared by Luis Gil

China's Trade Surplus; Source: Bloomberg, Prepared by Luis Gil

Filed under: Global Economics, World, , , , , , , , , , , , , ,

China To Cut Export Tax to Zero as Part of Stimulus

China has set a plan to cut its export taxes to zero in an effort to encourage producers to sell their products abroad, the nation’s commerce minister said today. He added that the Asian country will “use all possible measures to ensure the stable growth of our exports and prevent a large drop in external demand.” The plan comes less than one week after it was reported that Premier Wen Jinbao would announce additions to the 4 trillion Yuan ($585 billion) stimulus package that was set in October.

Timing couldn’t be any more perfect. Indeed, collapsing global trade has forced the world’s third-largest economy to see its export volume plummet by 17.5% in January alone. Early reports, albeit unofficial, predict February’s figure to plummet by even more than that.

– LG

Filed under: Global Economics, , , , , , , , , , , , ,

Obama Trade Pick Found to Have Tax Problems (But It’s OK)

“Word today that yet another Barack Obama appointee has a little problem with taxes — a $10,000 problem.

Ron Kirk, the former mayor of Dallas who would be the White House chief trade representative if confirmed, didn’t pay taxes on some speaking fees he donated to his alma mater and he tried to write off the full $17,000 costs of his Dallas Mavericks season tickets.”

Ron Kirk, Obama Pick for Chief Trade Rep.; Source: LA Times

Ron Kirk, Obama Pick for Chief Trade Rep.; Source: LA Times

Filed under: Obama, , , , , , , , , , , , ,

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