GDP revisions put China on target to double economy, but data doubts remain By Reuters


© Reuters. An electric delivery vehicle drives in the Central Business District in Beijing

BEIJING (Reuters) – China on Friday revised up its nominal 2018 gross domestic product (GDP) by 2.1% to 91.93 trillion yuan ($13.08 trillion), keeping it on track to achieving its goal of doubling the size of its economy by 2020 from 2010.

However, with the economy growing at its weakest pace in nearly three decades, the revisions could fuel scepticism about the credibility of Chinese data with some analysts suspecting authorities may be massaging the numbers to achieve Beijing’s ambitious targets.

In a statement, the National Bureau of Statistics (NBS) said the change in the size of 2018 GDP will not significantly influence the calculation for the 2019 growth rate.

Yet some analysts suggest the nominal nudge may actually not be so nominal after all.

Despite “NBS stressing that the current round of revisions is the result of the census uncovering previously unrecorded activity, it’s hard to ignore the fact that it will also help them meet official growth targets,” said Julian Evans-Pritchard, Senior China Economist at Capital Economics, in a note.

In previous revisions real growth has almost always been revised upwards, he said.

Indeed, growth of about 6.2% is seen needed for the whole of this year and the next to meet the Communist Party’s longstanding goal of doubling GDP and incomes in the decade to 2020.

Such a rate of expansion would be a stiff ask given the 6.0% GDP growth logged in the third quarter – the slowest pace since 1992 – and with many analysts tipping the pace to slip below 6% in 2020.

A slowdown in demand at home and abroad has weakened the world’s second-biggest economy, in part with business investment and factory activity hit by a trade war with the United States.

China routinely revises its annual GDP data. Days before GDP data for 2018 was released in January, the statistics bureau cut its final 2017 growth figure to 6.8% from 6.9%.

China’s fourth National Economic Census, released on Wednesday, included “richer” data points that showed more business entities and a bigger total asset base in 2018 than assumed under earlier GDP estimates, Li Xiaochao, deputy head of the statistics bureau, told Reuters earlier this week.

Revisions to historical GDP figures will also be made, Li told reporters.

The services sector contributed more to GDP in 2018 than the original data had indicated, the statistic bureau said. Nominal GDP includes changes in prices due to inflation, so it is usually higher than adjusted, or real GDP.

MASSAGING NUMBERS TO HIT TARGETS?

Analysts say that without further information from the NBS, it’s hard to calculate the impact of the latest adjustments on the 2018’s real GDP or the GDP growth rate for that year.

But a rough estimate of an adjusted real GDP growth in 2018 might be 8.9%, compared to an original reading of 6.6%, said Chaoping Zhu, Global Market Strategist at J.P. Morgan Asset Management, in a note.

The government’s target range for 2019 growth is 6%-6.5%. The economy expanded 6.4% in the first quarter, 6.2% in the second and 6.0% in the third – the weakest pace since 1992.

If the 2018 figure is revised up, the government might be more tolerant of an economic slowdown next year and set a lower growth goal in 2020, said Zhu.

As the deadline for doubling the size of the economy draws nearer, it’s become increasingly clear that the target was “too ambitious,” said Evans-Pritchard.

“Our research suggests that political pressure to meet growth targets has encouraged the National Bureau of Statistics (NBS) to massage the GDP deflator in recent years.”

The GDP deflator is the ratio of nominal to real GDP.

In an email to Reuters, Louis Kuijs, head of Asia economics at Oxford Economics, said he would not discount the possibility of the NBS massaging the data. However, an upward revision by the NBS is neither surprising nor unreasonable, he said, noting that newly included sectors in statistical coverage tend to grow quickly.

“Also, outside of China, revisions of the size of economies are almost always upwards,” he said.

A paper published by the U.S.-based Brookings Institution earlier this year said China had overestimated nominal and real growth rates by about 2 percentage points between 2008 and 2016.



Australia housing market revival to continue into 2020: Reuters poll By Reuters


Australia housing market revival to continue into 2020: Reuters poll

By Vivek Mishra

BENGALURU (Reuters) – Australia’s housing market revival will carry on into 2020 thanks to a series of interest rate cuts from the Reserve Bank of Australia this year and another expected next year, according to a Reuters poll of property market analysts.

Respondents were, however, skeptical about how long the rebound would last, with most saying it would only be a year before the rate of house price inflation cooled off again.

The latest Reuters poll of 13 property analysts taken Nov. 6-20 showed average home prices would rise 5.0% nationally next year, nearly double the rate predicted just three months ago, and then slowing to 4.5% in 2021.

Six of 10 analysts who answered an additional question said further interest rate cuts to the record-low 0.75% benchmark cash rate after three RBA cuts already this year would stimulate Australia’s housing market activity and prices significantly.

“Oh, how the story has changed. Six months ago, the key debate among many Australian housing market observers was how much further prices could fall,” noted Paul Bloxham, chief economist at HSBC in Sydney.

“We expect housing prices to continue to rise in 2020, underpinned by mortgage rates, which are likely to stay low for a considerable period of time.”

The RBA is expected to ease once more in 2020 in its bid to boost a slowing economy that has marked nearly three decades of uninterrupted expansion.

All but one respondent in the latest Reuters poll said that Australia’s housing market activity is more likely to rebound over the coming 12 months than decline again.

“Households have responded strongly to regulatory easing and rate cuts. Strong pricing growth particularly in Sydney and Melbourne is likely over the next year,” noted Adelaide Timbrell, economist at ANZ.

A regional breakdown of the poll data showed Sydney and Melbourne, Australia’s two most populous cities which contribute about 43% to the country’s gross domestic product, would lead property price growth in 2020.

House prices in Sydney and Melbourne were forecast to rise 7.7% and 7.4% in 2020, respectively. In Brisbane and Adelaide they were expected to rise 2-3% next year and in 2021.

But analysts were skeptical about how long the sudden revival in Australia’s property market would last, particularly given that the broader economy is still not showing many signs of improvement.

Australia’s wage price index rose 0.5% in the third quarter and consumer sentiment held below average in November, suggesting that recent monetary policy stimulus has failed to spur household demand.

In a Reuters poll taken last month, economists forecast the Australia economic growth to slow to 1.9% this year, the weakest rate since the 1990-1991 recession, followed by 2.5% in 2020 and 2021.

“A strong rebound in household consumption will remain elusive given that the outlook is for income growth to remain subdued in the coming quarters,” noted Katrina Ell, economist at Moody’s Analytics.

China, Australia’s largest offshore property investor, has imposed strict capital controls amid the ongoing trade conflict with the United States. Analysts said that could affect the sustainability of the recent house price recovery.

“Low foreign demand for housing and a weaker economic environment should limit home price growth. Our view is of national home price growth of around 5% after this initial bounce has run its course,” said Diana Mousina, senior economist at AMP Capital in Sydney.

On an affordability scale of 1 to 10, where 1 is extremely cheap and 10 is extremely expensive, Australia house prices were rated 7 by respondents in the Reuters poll.

(Polling and analysis by Vivek Mishra; Editing by Ross Finley and Alexandra Hudson) OLUSECON Reuters US Online Report Economy 20191122T000819+0000



Euro zone consumer confidence rises to -7.2 in November By Reuters


Euro zone consumer confidence rises to -7.2 in November

(Reuters) – Euro zone consumer confidence rose by 0.4 points in November from the October number, figures released on Thursday showed.

The European Commission said a flash estimate showed euro zone consumer morale improved to -7.2 this month from -7.6 in October.

Economists polled by Reuters had expected a rise to -7.3.

In the European Union as a whole, consumer sentiment rose by 0.6 points to -6.7.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Vietnam Takes ‘Drastic Steps’ on Fraudulent Exports to U.S. By Bloomberg



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Vietnam is intensifying efforts to crack down on Chinese exporters trying to route products through the Southeast Asian nation to bypass higher U.S. tariffs, a customs official said.

Vietnam has become one of the top destinations for suppliers looking to avoid U.S. duties on Chinese products amid the trade war, making the country vulnerable to goods fraudulently labeled as “Made in Vietnam,” Au Anh Tuan, head of customs control and supervision in the General Department of Vietnam Customs, said in an interview in Hanoi.

“We’ve seen trade-fraud activities increase strongly since the trade war started,” he said. “We’ve increased cooperation with U.S. authorities to fight against that. We’re taking drastic steps, including compiling a list of 25 items to watch.”

Vietnam’s trade surplus with the U.S. reached nearly $40 billion in 2018. The gap hit almost $41 billion in the first nine months of 2019, up 29% on-year, according to U.S. Census Bureau data.

U.S. Watchlist

“They really need to step up their game in this area,” said Nestor Scherbey, a licensed U.S. customs broker and consultant based in Ho Chi Minh City. “If they don’t pay attention to the country of origin of the goods being exported, they’re going to have trouble.”

In May, the U.S. Treasury Department added Vietnam to a watchlist of countries being monitored for possible currency manipulation. Asked in June if he wanted to impose tariffs on Vietnam, President Donald Trump described the country as “almost the single worst abuser of everybody.” Earlier this month, on a visit to Hanoi, Commerce Secretary Wilbur Ross urged Vietnam to reduce its trade surplus with the U.S.

The U.S. is Vietnam’s largest export market. Capital Economics Ltd. estimates that if Trump imposed 25% tariffs on imports from Vietnam as he did with Chinese goods, it would shave more than 1 percentage-point off the country’s growth rate — more than erasing the approximately 0.5 percentage-point gain Vietnam has seen this year as a beneficiary of the trade war.

Vietnamese officials say the country will buy more big-ticket items from the U.S., including Boeing (NYSE:) Co. planes and liquefied , to help trim the surplus.

Special Scrutiny

Customs officials are focusing on “highly suspicious” sectors — such as electronic components and wooden furniture — that have seen annual exports surge by more than 15%, said Mai Xuan Thanh, deputy director general of the customs department. Hundreds of domestic and foreign companies are under “special scrutiny for suspect exports,” he said.

U.S. authorities have informed their Vietnamese counterparts about big increases of any items from Vietnam that concurrently saw big drops in Chinese shipments to the U.S., Tuan said. Through October, Vietnamese customs had uncovered about 14 significant cases this year of exports with fake labels.

Beginning Dec. 27, Vietnam will suspend transshipment and temporary imports of plywood products headed to the U.S., Industry and Trade Minister Tran Tuan Anh said earlier this month. The National Steering Committee for Anti-Smuggling and Trade Fraud ordered provinces along the country’s borders to step up inspections of goods being imported.

Vietnamese customs last month said it discovered and seized about $4.3 billion of Chinese aluminum falsely labeled “Made in Vietnam” that was meant to be shipped overseas, mostly to the U.S.

“We’ve been putting a lot more resources toward preventing fraudulently labeled exports and illegal trans-shipments,” Tuan said. “This is really hard work given the ongoing trade war.”

(Updates with number of export fraud cases in 10th paragraph.)



German exports stabilized, but trade risks remain: finance ministry By Reuters



BERLIN (Reuters) – German exports stabilized at the end of the third quarter but a slowing world economy and persistent trade risks for Europe’s largest economy point to only moderate developments in the coming months, the finance ministry said on Thursday.

Germany’s manufacturers, whose exports have been a reliant growth driver for decades, are struggling with weaker foreign demand, tariff disputes sparked by U.S. President Donald Trump’s trade policies and business uncertainty linked to Britain’s decision to leave the European Union.

“Export activity regained some momentum toward the end of the third quarter,” the finance ministry said in its monthly report, adding that business sentiment surveys and industrial orders were pointing to a continued trend of subdued trade.

“Given the weakening global economic momentum and persistent external risks (for trade), exports are likely to continue to develop only moderately,” the ministry said.

Record-high employment and rising wages continue to support private consumption and construction in Germany while state spending is giving the economy an additional push, it added.

The German economy narrowly avoided slipping into recession in the third quarter as consumers, state spending and construction drove a 0.1% quarterly expansion.

The Federal Statistics Office will publish detailed gross domestic product growth figures on Friday which will shed more light on how much household consumption, government spending, private sector investment and foreign demand helped Europe’s largest economy to avoid another quarter of contraction.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



UK home prices to lag inflation on Brexit uncertainty: Reuters poll By Reuters



By Jonathan Cable

LONDON (Reuters) – Annual home price rises in Britain won’t keep pace with already-low inflation until 2021, a Reuters poll found, and will fall in the capital London this year as uncertainty around the country’s departure from the European Union continues to deter buyers.

Britons voted in a June 2016 referendum to leave the EU but there is still no clarity about how, when or even if the two sides will finally part ways.

That uncertainty is likely to continue even if Britain leaves by Jan. 31 as is currently scheduled as there is another tight deadline – by the end of 2020 – for both parties to hammer out a new trade deal, though many doubt that target can be met.

Prices in London, for decades a magnet for foreign investors and speculators, will fall 1.5% this year and only hold steady in 2020, the Nov. 5-18 Reuters poll found.

But highlighting the ambiguity, forecasts for this year ranged from -3.0% to no change. For 2020, the range was even wider, from -2.0% to +5.0%.

“Until we have greater certainty regarding the political environment it isn’t possible to forecast what might happen in London with the greatest accuracy,” said Rod Lockhart at property finance hub LendInvest.

“We do not anticipate a material price rebound in London until at least 2022, although we may experience some recovery from 2021 – if and when the political ‘dust’ begins to settle.”

London-focused real estate agent Foxtons Group (L:) reported a fall in third quarter revenue late last month and said ongoing political uncertainty continued to weigh on volumes and prices in the London residential sales market.

For a graphic on the UK housing market outlook, click https://fingfx.thomsonreuters.com/gfx/polling/1/640/636/UK%20house%20prices%20outlook.png

Nationwide, home prices will rise 1.0% this year, 1.5% in 2020 and 2.3% in 2021, the poll of 27 property market specialists predicted. Inflation is forecast for those years at 1.9%, 1.9% and 2.0% respectively.

“Regardless of what happens with Brexit in the months ahead, a revival in the housing market is unlikely,” said Hansen Lu at Capital Economics.

“Indeed, even if a Brexit deal is implemented soon, we expect to see only a small improvement in housing market transactions and house price growth over the next two years.”

Based on recent public opinion polls, British Prime Minister Boris Johnson looks set to win a Dec. 12 election and secure the backing in parliament he needs to get his new Withdrawal Agreement passed and take Britain out of the EU on Jan. 31.

Johnson’s Conservative Party has extended its lead over the opposition Labour Party during the past week, an opinion poll by ICM for Reuters showed on Monday.

BREXIT DEAL BOUNCE

Economists in another Reuters poll last week overwhelmingly said Britain would eventually strike a free-trade deal with the EU. The second-most likely resolution was Britain remaining a member of the European Economic Area.

But third most likely in the poll of economists was the country leaving the EU without a deal and trading under World Trade Organization rules – something the housing market experts polled by Reuters said unanimously would have the most deflationary impact on home prices.

Economists said the least likely outcome was Brexit being canceled. Housing watchers – again, unanimously – said that outcome would be the most inflationary for house prices in the coming year.

Rising prices would not be welcomed by first-time buyers struggling to get on the property ladder since, despite very low borrowing costs, scraping together the minimum 10% deposit demanded by most lenders poses a huge challenge.

The average asking price nationally for a home was 302,808 pounds ($391,652) this month, property website Rightmove said, around ten times the average British salary. The average price was double that in London.

When asked to describe the level of London house prices on a scale of 1 to 10 from extremely cheap to extremely expensive, the median response was 8. Nationally they were rated 6.

“While house prices in London and the surrounding regions have been falling over recent months, prices are still significantly higher than elsewhere in the country, making buying a property in the capital unaffordable for many people,” said Jamie Durham at PwC.

“But this affordability problem is not constrained to just the capital, and house prices are high relative to wages right across the country.”

(Polling by Sarmista Sen and Khushboo Mittal; Editing by Ross Finley/Mark Heinrich)



Japan’s Exports Drop Most Since 2016 Amid Trade Wars and Typhoon By Bloomberg



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Japan’s exports suffered their largest drop in three years in October, as the U.S.-China trade war continued to hit global demand and extreme weather disrupted output at home.

Exports fell 9.2% from a year ago, dropping for an 11th month and extending the longest streak of monthly declines since 2016, Ministry of Finance data showed Wednesday. Economists had forecast a 7.5% slide. Exports to China and the U.S., Japan’s two biggest markets, logged double-digit falls. Drops in automobile and steel shipments were major factors, along with damage from last month’s super typhoon.

Key Insights

  • Despite rumblings that Washington and Beijing are nearer to a truce that could roll back tariffs, global manufacturers remain in a funk over the global economy and uncertainty surrounding the trade outlook.
  • Takeshi Minami, economist at Norinchukin Research Institute, said the continued weakness in exports could be a factor that pushes the Japanese government to add to the size of a stimulus package announced earlier this month, partly to shield the economy from the global slowdown. “We may see politicians increasingly calling for a sizable economic package,” he said.
  • Still, the latest data, partly distorted by bad weather, needn’t be a cause for pessimism, Norinchukin’s Minami said, adding that there were further signs that the worst was over for the global tech sector.
  • Speaking after the data was released, a finance ministry official said that manufacturing disruption caused by Typhoon Hagibis may have contributed to October’s drop in auto trade.
  • The export slump has made the economy more dependent on consumer demand at a particularly vulnerable time. A sales tax hike introduced last month is expected to weigh heavily on spending this quarter.
  • South Korean boycotts of Japanese products likely contributed to the drop in Japan’s exports of autos and food to its neighbor, according to economist Yutaro Suzuki at Daiwa Institute of Research Holdings. Since summer, the two countries have been embroiled in their own trade spat stemming from a dispute over Japan’s colonial past. Exports to Korea fell 23% in October.

What Bloomberg’s Economist Says

“The U.S.-China trade war continues to undermine supply-chain demand, and remains the biggest downside risk to Japan’s exports.”

–Yuki Masujima, economist

Click here to read more

Get More

  • Imports slid 14.8% in October, compared with economists’ median estimate of a 15.2% slump.
  • The trade balance was a 17.3 billion yen surplus, the first surplus since June.
  • Exports to China dropped 10.3%, while shipments to the U.S. fell 11.4%.
  • Chipmaking equipment exports were down 5.7% in October, compared with average falls of 16.2% over the six months through September. Exports of chips were up 3.6% in the month, compared with average falls of 2.3% in the prior six months.

(Updates economist comments.)

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Australia to fast-track $2.6 billion worth of infrastructure spending in bid to revive economy By Reuters



By Colin Packham

SYDNEY (Reuters) – Australia’s conservative government will fast-track A$3.8 billion ($2.59 billion) in infrastructure spending, Prime Minister Scott Morrison said on Wednesday – a fillip to a stalling economy.

Australia’s economic growth has slumped to its lowest in a decade, led by weakness in consumer spending and home building.

Desperate to reinvigorate the economy, the Reserve Bank of Australia (RBA) has chopped interest rates by 75 basis points to an historic low of 0.75%, though it has repeatedly said increased government spending on infrastructure was required.

Heeding those calls, Morrison will use to a major speech on Wednesday to promise an injection of government spending on road and rail projects across the country, two sources familiar with the plans told Reuters.

Nearly half of A$3.8 billion to be invested over the next four years will be spent over the next 18 months, Morrison will say.

Speaking ahead of the speech in Brisbane, Morrison confirmed the infrastructure plan.

“All these projects will provide important extra support to the economy,” Morrison told Australia’s Channel 7.

Morrison has for several months since his unexpected re-election in May dismissed calls for accelerated infrastructure spending, insisting the government was focused on delivering Australia’s first budget surplus in more than a decade.

But with iron ore prices hitting new highs, Morrison’s conservative government has more fiscal firepower to prop up the country’s struggling economy.

The infrastructure spending plan is also a boost to the RBA, which discussed cutting interest rates again this month, though it decided to assess the impact of the three cuts already delivered since June.

Analysts generally assume the central bank would not want to take its cash rate below 0.5% and would have to resort to other stimulus steps such as asset purchases or lending to banks at super-low rates.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Netherlands spares pensioners cuts in 2020 as funds rebuild ratios By Reuters


© Reuters. FILE PHOTO: EU Summit in Brussels

By Toby Sterling

AMSTERDAM (Reuters) – Millions of Dutch pensioners were spared cuts to their retirement income in 2020 after the government granted pension funds a year’s grace period to restore sagging coverage ratios, although it said future cuts and higher premiums are likely.

The retreat by Mark Rutte’s centrist government had been widely expected, given anger among pensioners and national elections due in 2021. But the decision could hurt the reputation of the Netherlands’ pension system, often rated ‘best in the world’ and framed as an example for other countries.

Social Affairs Minister Wouter Koolmees said he would only force payout cuts next year if funds fall below a 90% coverage ratio. Previously, those with a ratio below 94-95%, including the large ABP and PZFW funds, had been on track to do so.

“I understand the wish not to lower pensions very well,” he wrote in a letter to parliament, adding that “cuts can be necessary in order to maintain support for the system as a whole”, including existing workers and young people set to join.

Dutch pension funds hold a massive 1.5 trillion euros ($1.7 trillion) in assets, including 456 billion euros at the ABP fund for civil servants and 238 billion euros at the PFZW fund for medical workers. Their coverage ratios have been declining for years, despite solid investment returns, as falling interest rates have swollen their future liabilities.

As of Oct. 31, the ABP reported a coverage ratio of 93.2%, while PFZW’s stood at 92.2%, although both will have recovered slightly with November’s interest rate rally and market gains.

Koolmees said the pause would help as pension funds, unions and the government attempt to move to a new system that will emphasize defined contributions and weaken benefit guarantees.

He also repeated that market rates must be used to discount, or calculate, fund liabilities as switching to higher rates, “would mean a large and continuing transfer of pension assets from younger to older generations”.

Koolmees warned that if low interest rates persist, in addition to cuts, premiums will also have to rise sharply.

Unlike in many countries, funds in the Dutch system must use market-derived rates to calculate their future liabilities, rather than rates based on historical investment returns.

Groups opposed to pension cuts have challenged that, arguing that current low and often negative interest rates are exceptional.

But academics and the Dutch Central Bank have mostly endorsed cuts, saying low rates look set to persist.

The Dutch population, as in many countries, is rapidly ageing, with the greatest strain on its pension system not expected until around 2040.

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.



Hong Kong confirms economy fell into recession amid protests, trade war By Reuters


© Reuters. FILE PHOTO: A woman crosses a street in the Central business district in Hong Kong

HONG KONG (Reuters) – Hong Kong sank into recession for the first time in a decade in the third quarter, government data confirmed on Friday, weighed down by increasingly violent anti-government protests and the escalating U.S.-China trade war.

The economy shrank by 3.2% in July-September from the previous quarter on a seasonally adjusted basis, revised government data showed, in line with a preliminary reading.

Gross domestic product (GDP) contracted for the second consecutive quarter, meeting the technical definition of a recession.

With no end to the protests in sight, analysts warn the financial and trading center potentially faces a longer and deeper slump than during the global financial crisis in 2008/2009 and the SARS epidemic in 2003.

From a year earlier, the economy contracted 2.9%, also in line with the preliminary reading. The readings were the weakest since the global crisis.

“Domestic demand worsened significantly in the third quarter, as the local social incidents took a heavy toll on consumption-related activities and subdued economic prospects weighed on consumption and investment sentiment,” the government said in a statement.

It revised down its forecast for full-year growth to a contraction of 1.3% versus an earlier estimate of 0-1% growth. That would mark the first annual decline since 2009.

“Ending violence and restoring calm are pivotal to the recovery of the economy. The government will continue to closely monitor the situation and introduce measures as necessary to support enterprises and safeguard,” the government said.

More than five months of political protests have plunged the city into its worst crisis since it reverted from British to Chinese rule in 1997.

Tourists are cancelling bookings, retailers are reeling from a sharp drop in sales and the stock market is faltering, adding to pressure the city is feeling from China’s economic slowdown and the prolonged Sino-U.S. trade dispute.

August retail sales were the worst on record – down 23% from a year earlier – while September’s plunged 18.3%.

Parts of the city were paralyzed for a fifth day on Friday. Transportation disruptions have become common and some shopping malls and other businesses are shuttering early as the unrest escalates.

BUSINESS GATEWAY TO CHINA

Hong Kong is one of the world’s most important financial hubs with total banking, fund and wealth management assets worth more than $6 trillion.

Many businesses with ambitions to expand in China still consider it as a gateway into the mainland, while Chinese firms use it to access international capital, as well as a testing ground and springboard for their global ambitions.

Business activity in the private sector fell to its weakest in 21 years in October, according to IHS Markit, while demand from mainland China declined at the sharpest pace in the survey’s history – which started in July 1998.

The government has rolled out stimulus measures since August, but since it is forced to keep a high level of reserves to back the Hong Kong dollar peg to the U.S. dollar, the packages have been relatively small.

Analysts also doubt the effectiveness of handouts, since the uncertainty prevents businesses and consumers from spending and investing, and store closures will lead to job losses.