Business
Kia ora, Welcome to Wednesday's Economy Watch where we follow the economic events and trends that affect New Zealand.I'm David Chaston and this is the International edition from Interest.co.nz.Today we lead with news the OECD sees global growth back on track.But first up today, there was another dairy auction overnight and this one was positive in a minor but gratifying way. Overall prices rose +1.0% in USD terms and +2.4% in NZD terms, benefiting from the -1.5% fall in the NZD since the previous auction. This time prices were led by the WMP price which was up +2.2% since last time. Volumes sold through this channel were stable, similar to the prior 15 events, but far less than the volumes offered at the year-ago event - and prices are +30% higher than then.In China, Evergrande has come under even more pressure after ratings agency S&P said the company was likely to default (NSS). Their debts are huge and Western bond funds have lots of it on their books. But more analysts now doubt an Evergrande failure will seriously threaten the Chinese economy. The expectation of a Beijing bailout of some sort is high. Not everyone agrees: the RBA noted in minutes released yesterday that the risks to China’s outlook for growth and financial stability are rising.In the US, August housing start data was positive, reversing the unexpected July fall which was revised up.The Indonesian central bank reviewed its policy setting late yesterday and left everything unchanged. It is sticking to its growth forecast of 3.5 to +4.3% this year, and still hopes to keep inflation between its 2% and 4% target range. They see good recovery signs in their post-pandemic economy.The OECD has given an optimistic assessment of where the global economy is going in 2021 and 2022, raising is forecasts for economic activity. Interestingly, it sees inflation pressures high in the US, Canada and some emerging markets, but not a concern in Europe or Asia. However, this same outlook gave Australia a sharp growth downgrade, the largest of any country assessed in this report. (New Zealand wasn't covered.)That expansion, and the well-known global supply chain troubles, are causing a continuing, if unusual problems at the main ports in California. More than 65 container ships were waiting to unload in Los Angeles yesterday at ports that handle about half of all inbound container traffic. Normally it is unusual for any ships to have to wait at these ports.In Australia, new data shows that the number of people and small businesses receiving financial hardship assistance from banks during the latest lockdowns in NSW and Victoria has rocketed.The UST 10yr yield opens today at just under 1.33% and marginally higher from this time yesterday. The price of gold will start today firmer at US$1776/oz and up another +US$13.But oil prices have bounced around overnight but are back to yesterday's levels at this time of US$70.50/bbl in the US, while the international Brent price is still just under US$73.50/bbl.The Kiwi dollar opens today at just on 70 USc and lower since this time yesterday. Against the Australian dollar we are lower too at just over 96.8 AUc. Against the euro we are soft at 59.7 euro cents. That means our TWI-5 starts today at 73.4 and slipping back towards the middle of the 72-74 range of the past ten months.The bitcoin price has fallen further today, and is down at US$41,831 another -5.0% drop from this time yesterday. Volatility in the past 24 hours has been extreme too at just under +/- 4.9%.You can find links to the articles mentioned today in our show notes.And get more news affecting the economy in New Zealand from interest.co.nz.Kia ora. I'm David Chaston and we’ll do this again tomorrow.