Episode Details

Kia ora,

Welcome to Monday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the international edition from Interest.co.nz.

And today we lead with news the messy international outlook continues but so far the changes are more in prospect than real.

First however, this will be a big week of data and policy releases. Not only will Australia review its policy rate tomorrow (a -25 bps cut is anticipated taking their cash rate target to 4.10%), our own RBNZ has its first monetary policy review of 2025 and it is widely expected they will deliver a -50 bps cut to 3.75%. China also reviews rates this week on Thursday, but no change is expected from them.

On Wednesday, there is another full dairy auction.

Canada and Japan will release January CPI data. And there will be many January PMI releases this week.

In data out over the weekend from China, banks lent a record +¥5.22 tln in new loans in January, far above the +¥990 bln in December and easily beating forecasts of +¥800 bln. It is a spectacular show of support by banks for the push by Beijing to juice up its economy via more debt.

Foreign direct investment in China plunged -99% over the past three years, Chinese government data shows, as their economic slowdown and concerns about their 'everything is national security' approach drove investors away. China only recorded a net inflow in 2024 of +US$4.5 bln and that is their lowest in more than 30 years. In two of the four quarters of 2024 there was in fact a net outflow.

Up from +1.8% in 2023, Singapore's economy grew +4.4% in 2024 on the back of stronger-than-expected rebounds in exports and tourism. This was an upward revision from the preliminary +4.0% rate reported by them earlier. By itself, Singapore's Q4 rose at a +5.0% rate.

Malaysia downgraded its growth in its Q4-2024 update to +5.0% from a year ago. This was due to weak progress in Q4 from Q3.

In the US, retail sales were +4.2% higher in January from a year ago, a slightly slower pace than in December (+4.4%). This official data backs up the Redbook survey we report weekly. But we should note that the good January data came despite a sharpish fall-off in car sales in the month. That fall-off contributed to seasonally adjusted retreat in January from December and one that was notably more than expected.

Business inventory data out for December actually shows lower levels, and their inventory-to-sales ratio improved unexpectedly. This shift might be due to public-policy uncertainty around tariffs.

With inventories lower than expected, it therefore won't be a surprise to know that US industrial production in January rose on a year-on-year basis, and by more than expected. But the January rise from December wasn't as strong. But at least it was a rise

It is Presidents Day in the US on Monday (tomorrow NZT), a Federal holiday, but only inconsistently observed by business and many states.

Across the border, Canada said its manufact