Canary Wharf, London (PRWEB) March 9, 2011
TradingFloor.com, the home of Saxo Bank's trading commentary, financial research and analysis, has released a video discussing China's economy and what effect the recent disaster in New Zealand will have on the economy there.
Recent data in China has suggested that the world's second-largest economy might be slowing down. Meanwhile, an interest rate cut in New Zealand is on the cards to boost earthquake recovery and overall economy. In the video Andrew Robinson, FX analyst for Saxo Capital Markets, discusses the economic outlook for both China and New Zealand in the coming months.
Firstly, Andrew discusses the general economy and outlook in China at the moment. Recent Purchasing Managers' Index (PMI) data out of China was a bit of a surprise. As PMI data in the Western world continues to surprise to the upside, China has had its third contraction in the manufacturing sector in three months. It has also seen the pace of increase at its slowest in six months. However, Andrew points out that the timing of Chinese New Year has probably had some impact on these figures, as most of the service sector shuts down for a week during the New Year celebrations. Overall, there is a warning that while the Chinese economy has had a good run, it may be facing some tougher times ahead.
Andrew also discusses the latest five year plan to be published by the Chinese government. One the main problems with China's five year plans is that they are broken every single time. The last plan which covered the 2005 to 2010 period had a target of around 7.5% Gross Domestic Product (GDP) growth, but the slowest growth that was seen during those five years was 9.2%. Therefore, Andrew believes it will be hard for them to achieve a slower and more sustainable growth, even though it presents itself as a good idea.
Finally, Andrew discusses the recent earthquake in New Zealand, and the economic effect it is having. There are currently talks of rate cuts to help pay for the 20% of GDP bill for recovering from the recent earthquake. Andrew points out that the short-term economic impact on New Zealand is obviously very negative, but once the rebuilding programme starts, there will be quite a positive GDP input. Overall, Andrew believes that this will be enough to set Christchurch and the New Zealand economy back on the right footing.
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