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New Zealand’s Economy Grows 0.9% in Second Quarter

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The New Zealand’s economy grew at the same pace in the second quarter as the first quarter, but with stronger production.

Gross domestic product rose 0.9 percent in the second quarter, pushing annual growth to 3.6 percent, Statistics New Zealand reported on Thursday.

The increase in international demand for goods (dairy, meat and fruit) saw exports climb 4 percent, its biggest quarterly increase in two-decade.

While household spending surged by 1.9 percent, with Kiwis reportedly spending more on eating out, furnishing their houses and going away.

Construction grew 5 percent, with increases in all sub-industries.  There’s also been an increase in investment in residential building and construction-related investment.

Service industries grew 0.7 percent.  The main drivers were rental, hiring, real estate, retail and health care.

GDP per capita rose 0.5 percent in the June quarter, up from a 0.3 percent increase in March.

As for what this means for our hip pockets, ANZ chief economist Cameron Bagrie say any growth flows into the economy and eventually into wages.

“If we continue to see unemployment track down, wages will start to move up and people will start to get ahead.

“We’re seeing real wage growth at the moment of 1.5 percent, but I’m expecting that to grow to 2.5 percent over the next 24 months.”

Finance Minister Bill English says the annual results puts New Zealand in the top three in the OECD in terms of high growth rates.

It also puts the worth of New Zealand’s economy at $250 billion for the first time.

Mr English says the annual growth is more than double the OECD rate of 1.6 percent and compares with 3.3 percent in Australia, 2.2 percent in the UK and 1.2 percent in the US.

But international economist Ann Pettifor says New Zealand’s economy is “hugely imbalanced”.

Ms Pettifor, a UK-based economist and director of Prime: Policy Research in Macroeconomics, told Paul Henry central banks, including New Zealand’s Reserve Bank should be managing the way banks lend money.

“In Auckland, banks are lending crazy money on speculation – speculating that property prices will rise.

“It’s overvalued bricks and mortar and speculating that that price will continue rising forever and of course it won’t and when it starts falling then the debt has to be re-payed and the equity in the property falls.”

She says talk of New Zealand being a “rockstar economy” was “the kind of language we heard before the [Global Financial Crisis]”.

“But what’s interesting about New Zealand is that inequality rose in this country more than in any other developed country in the world between 1980 and the 2000s – that’s extraordinary.”

She says those levels of inequality lead to political instability which has led to the rise of the likes of Donald Trump and “fascists in Europe”.

Labour’s finance spokesperson Grant Robertson says everyday Kiwis won’t be feeling the benefits of GDP growth.

“The answer is because on a per person basis our economy is barely moving.

“We have seen enormous population growth in New Zealand in the last year and that generates economic activity. But what these numbers show is that we are not getting the increased economic value from that to mean real sustainable growth. This adds further to the need to review and adjust immigration policy to ensure it contributes to real growth.”

He says real disposable income per capita fell in the past quarter, meaning Kiwis “don’t feel they’re getting ahead”.

Mr Robertson says the economy is being kept afloat by population growth and an unsustainable housing bubble.

 

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Forex

Naira Declines to N465 Against US Dollar on Black Market

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Naira Dollar Exchange Rate

Naira Falls to N465 Against US Dollar on Black Market

Nigeria’s economic uncertainties continued to weigh on the Nigerian Naira despite the Central Bank of Nigeria’s forex sale resumption.

The local currency declined by N3 from N462 a US dollar to N465 on the black market even with over $58 million injected into the forex market through the bureau de change.

Against the British Pound, Naira depreciated by N5 from N595 to N600 on Friday while it dipped by N3 against the European common currency to N548, down from N545 it traded on Thursday.

A series of weak economic fundamentals and anti-people policy continued to hurt the nation’s economic outlook and investors’ confidence.

In a recent event, the Nigerian government simultaneously raised electricity tariffs, pump prices and foreign exchange rates in an economy that depends on imports for most of its supplies.

Also, with the unemployment rate at over 27 percent, inflation rate over 13 percent and the number of companies shutting downing operation rising on a daily bases, foreign investors and even local investors are now holding back on investments needed to support the nation’s weak foreign reserves and cushion the negative effect of COVID-19.

While the exchange rates have moderated slightly from COVID-19 peak, it remains close to COVID-19 record.

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Zenith Bank Joins Other Banks to Cap International Spend Limit at $100/Month

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Zenith Bank

Zenith Bank Caps International Spend Limit at $100 Per Month

Following persistent forex scarcity impacting the nation, Zenith Bank has joined other deposit money banks capping international spend limits.

In an e-mail to customers, the lender said “Please be informed that the monthly international spend limit for your Zenith Bank Naira Card has been reviewed to US$100 while the use of Zenith Bank Naira cards for international Automated Teller Machine cash withdrawals is still temporarily suspended.’

It added that this review is in response to change in Nigeria’s macroeconomic factors.

The bank, however, advised those with higher international spend requirements than the US$100 stipulated above to visit any Zenith branch and request a foreign currency debit or prepaid card “which are available in US Dollar, Pounds and Euro variants.”

This is coming a few weeks after UBA, GTBank, First Bank and others capped their international spend limits to $100 for similar reasons. However, Zenith’s decision was after the Central Bank of Nigeria commenced forex sale to the Bureau De Change Operators across the country.

 

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Nigeria’s Foreign Exchange Inflows Decline by 43.2% in May

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CBN Says Foreign Exchange Inflows Decline to $5.52bn in May

The total foreign exchange inflows into Nigeria in the month of May declined by 43.2 percent, according to the Central Bank of Nigeria’s report.

The report said the COVID-19 pandemic negatively impacted capital inflows during the month as the total foreign exchange inflows dropped to $5.52 billion.

It said “Inflows through the CBN and autonomous sources were negatively impacted.

“On a month-on-month basis, foreign exchange flows into the economy declined to $5.52bn in May 2020.

“The decline in inflow, relative to the level in April 2020, was attributed to the lower receipts from oil sources, which fell sharply by 55.2 per cent because of the continued fragility in global crude oil demand.

“Inflow through autonomous sources, particularly invisible purchases, declined by 7.0 per cent to $3.51bn, relative to the preceding month, while there was a 66.2 per cent fall in inflow through the CBN, which stood at $2.01bn in May 2020.”

However, foreign exchange outflows from the country declined by 23.9 percent to $2.50 billion in the month. Likely because of forex scarcity and the central bank forex rate adjustments that curbed outflows by foreign investors.

A break down of the report showed that outflow through the apex bank declined by 30.9 percent to $2.19 billion, below what was recorded in April.

But outflow through autonomous sources, mainly imports and Invisibles, rose by 152.2 percent to $0.32 billion. Higher than the amount reported for the month of April.

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