ofInterestNZ

Fires, fights & fragility undermine economic progress

Shutterstock Track 1219389 Monetization ID TFGEPGEI0LHEIJAI 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. Today we lead with news it is a good job we have sports to allow us a temporary distraction from the geopolitical mess that the US has initiated and which seems to just go on and on. A shut Hormuz and a jump in oil prices is bringing Groundhog Day. Back in the economic world, Tuesday's June CPI release will dominate this week's local data releases. Markets expect an elevated 4% rate (https://www.interest.co.nz/sites/default/files/styles/large/public/2026-07/CPI%20preview.jpg?itok=F0B-MGqZ) , keeping the pressure on the OCR and the RBNZ to contain it. Events in the Middle East aren't helping. The next OCR review is not until September 2 however. In Australia, it will be all about their June labour market release. Markets expect only modest jobs growth and no jobless rate change. But developments between the US and Iran will remain in the global spotlight after strikes escalated, impacting energy prices and interest rate outlooks for central banks. There is not much market-moving economic data expected from the US this week. But earnings season results will be watched for indications and surprises. In Japan, they will release trade and inflation updates (1.6%?). Taiwan will be interesting for its industrial production data. Korea for its Q1-2026 GDP outcome. And Indonesia will review its policy rate again, after the unusual interim hike, and then taking it to possibly 6%. For them it is all about supporting their weakening currency. There is little significant data out of China this week. However, here's something we haven't covered so far. Their June trade data (http://www.customs.gov.cn/customs/2026-07/14/article_2026071409284394944.html) for China shows that its crude oil imports are now at a ten year low. In fact their June crude oil imports were -11.4% lower than a year ago in volume terms. It is a shift that will have global implications. We can also note that China closed nearly 30,000 kindergartens and primary schools in 2025. It is the consequence of the growing demographic slump we have been noting for some time. Recent data (http://en.moe.gov.cn/documents/statistics/2024/national/202603/t20260319_1431434.html) released by the Ministry of Education revealed a severe structural divergence: while early childhood and primary education are shrinking rapidly, high schools and universities are expanding to absorb a demographic bulge from earlier birth peaks. Three Chinese airlines have ordered 95 Airbus commercial jets. This has swelled Airbus's non-US order book over rival Boeing. Airbus (https://www.airbus.com/en/products-services/commercial-aircraft/orders-and-deliveries) (89) delivered more aircraft than Boeing (https://www.boeing.com/commercial) (64) in June. Boeing is losing market share fast for clients outside the US, no doubt a direct consequence of reactions to nativist policies from Washington and risks of trade retaliation. Singapore's export growth (https://www.enterprisesg.gov.sg/-/media/esg/files/media-centre/media-releases/2026/july/mr03226_monthly-trade-report---jun-26.pdf) fell back sharply and unexpectedly in June. Electronics exports remained elevated, but non-electronics exports were unusually weak in the month. Their big decliners were for petrochemicals, food, and non-monetary gold. Trade with the US was especially hard hit. Across the Pacific in Canada, the spread of their enormous wildfires (https://www.cbc.ca/news/canada/thunder-bay/forest-fire-update-nwo-9.7273766) are becoming an international irritant. Canada is struggling to contain them. In an unusual move, the US is refusing to assist, even though Canada sends crews and support to the US when they have wildfire emergencies. There are also major wildfires (https://www.nifc.gov/fire-information/nfn) in many US states as well. In the US housing starts (https://www.census.gov/construction/nrc/pdf/newresconst.pdf) in June which came in +3.6% higher than year ago levels and brushing off their unusually weak May report. But for all the positives that some Fed district factory surveys have shown, these are not showing up in US industrial production data (https://www.federalreserve.gov/releases/g17/current/default.htm) yet. You might have thought the increased local stockpiling surge would be visible by now. But to June, it isn't. US industrial production rose a paltry +0.1% in June to be +1.1% higher than a year ago. And that is its weakest increase in three months. Although consumers are still very negative in their sentiment, there was a notable improvement in the latest survey results from the widely-respected and long running University of Michigan consumer sentiment survey (https://www.sca.isr.umich.edu/) . ...