Economy

Updates on the state of the economy, growth, inflation, and employment.

Economy
Global growth, easing inflation to underpin 2025: Goldman
While policy shifts in the wake of the U.S. election add a menacing layer of uncertainty to the future outlook, Goldman Sachs expects 2025 to continue delivering global expansion. The global investment bank expects 2025 to present substantial opportunities for macro investment strategies, which it believes will be a major driver of portfolio returns. Goldman expects corporate and securitised bonds to continue to offer attractive income potential with strong credit fundamentals. Capture income While all G10 central banks, except the BoJ, are expected to cut rates, Goldman sees opportunities for relative value interest rate exposures and a more diversified approach to duration. However, the investment bank remains vigilant about potential upside inflation risks that could alter central bank actions. While fixed income spreads are tight, Goldman believes a combination of deteriorating fundamentals and weakening technical dynamics would be needed to trigger a turn in the credit cycle, which is not its base case for the coming year. Consider tail risks in either direction With income potential across corporate bonds and securitised sectors remaining attractive, Goldman’s company-level analysis reinforces its ben
Economy
Mexico economy to gain from Netflix's $1bn investment
Netflix will invest US$1 billion (A$1.56 billion) into production in Mexico, with the goal of producing 20 films and series in the country each year. The deal involves four years of investment. Netflix’s first foray into Mexico was 2015 series Club de Cuervos, and its portfolio has included 2018’s Roma, the streamer’s first film to be nominated for the Academy Award for Best Picture. “President Sheinbaum, at Netflix we share your vision of a vibrant, prosperous Mexico full of growth and opportunity. And we want to play our part in making it a reality,” said Netflix CEO Ted Sarandos at a press conference with Mexican President Claudia Sheinbaum. “Our journey in Mexico so far has taken us from North to South — from Baja California’s sunset shores to the Caribbean's sunrise sands. We have produced in over 50 locations across 25 states. And with this renewed commitment, we look forward to deepening our partnership even more.” According to Sarandos, its 2024 film Pedro Páramo contributed more than MX₱375 million (A$28.8 million) to the country’s economy. Netflix will continue to fund programs developing diverse talent behind the camera in Mexico, Sarandos said. Netflix’s Latin American headquarters have been based in Mex
Economy
ACCC wants gas to light the east coast of Australia
The Institute for Energy Economics and Financial Analysis (IEEFA) has backed Australian government calls to accelerate an increase in gas supply to power the east coast grid. The Australian Competition and Consumer Commission (ACCC)’s January gas report forecasts that the perennially tight east coast gas market is likely to have sufficient gas supply to meet anticipated demand in 2025 and 2026.Source: ACCCThe report highlights longer-term concerns around future supply adequacy, with structural supply gaps likely to emerge as early as 2027 in the southern states along the eastern seaboard, and in the broader east coast gas market by 2029. “Natural gas will play a critical role in Australia’s transition to lower emissions. As we increasingly rely on renewables for electricity generation, gas will be required to support energy security, reliability and affordability, while remaining an important source of energy and feedstock for residential, commercial and industrial users.” - ACCC A range of factors, the IEEFA says, have contributed to the worsening supply-demand outlook: including: Declining gas production in the Gippsland Basin not being offset through additional domestic supply from elsewhere despite east coast gas pro
Economy
Trump considering rebate checks from DOGE savings
United States President Donald Trump has said that his administration is considering returning 20% of the funds saved by Department of Government Efficiency (DOGE) cuts to the public as rebate checks. DOGE has made major cuts to many federal agencies, including the Department of Education and the Consumer Financial Protection Bureau. At least 4% of all federal employees have accepted a DOGE buyout or been laid off since Trump took office last month. “There’s even under consideration a new concept where we give 20% of the DOGE savings to American citizens and 20% goes to paying down debt,” said Trump at the Future Investment Initiative Priority Summit. The rebate checks were first suggested by Azoria CEO James Fishback, who said this week on X that 20% of DOGE savings should be given to U.S. households paying federal income tax. This would represent 79 million households, according to Fishback. Musk then replied to Fishback’s post: “Will check with the President”. Musk has said he hopes DOGE will save up to US$2 trillion in federal spending, though he later said the organisation was expected to save just half of that figure. DOGE’s website lists around $8.6 billion in savings so far. Around 75,000 federal workers
Economy
UK inflation hits 3% in January, exceeding forecasts
The U.K.’s inflation rate climbed to 3% in January, outpacing analyst forecasts of 2.8%, according to data from the Office for National Statistics (ONS). The increase marks a sharp rebound from December’s 2.5% reading. Core inflation, which excludes volatile items such as energy, food, alcohol, and tobacco, rose to 3.7% from 3.2% the previous month. The annual core services inflation rate also increased from 4.4% to 5.0%, reflecting broad-based price pressures. The ONS attributed the sharp rise in consumer prices to higher transport costs and food prices, particularly meat, bread, and cereals. Additionally, the introduction of new VAT rules contributed to a nearly 13% rise in private school fees, further adding to inflationary pressures. Inflation had hit a more than three-year low of 1.7% in September before rising again due to increasing fuel costs and service sector price hikes. The Bank of England recently cut interest rates to 4.5% in response to slowing economic growth. The central bank projects headline inflation will rise to 3.7% in Q3 2025 due to global energy costs and regulated price adjustments before gradually declining toward its 2% target by 2027. Alongside its inflation outlook, the Bank of Englan

Economy
AU unemployment ticks up, participation rate hits record
Australia’s seasonally adjusted unemployment rate edged up to 4.1% in January from 4.0% in December as more people entered the workforce, according to the Australian Bureau of Statistics (ABS). The rise in jobseekers accompanied a strong increase in employment, with 44,000 jobs added, driven by full-time positions, while part-time employment declined. The participation rate, which measures the share of people working or seeking work, climbed to a record 67.3%, while the number of unemployed people increased by 23,400 over the month. Despite the uptick in joblessness, the labour market remained resilient, with employment growth surpassing economist forecasts. The employment-to-population ratio also hit a new high of 64.6% in January, reflecting the growing number of people entering the labour market. ABS head of labour statistics Bjorn Jarvis noted that the increase in both employment and unemployment was largely due to more women joining the workforce. "Most of the rise in both employment and unemployment in January reflected rises for women, with female employment rising by 44,000 and unemployment by 24,000. In contrast, male employment and unemployment both changed by less than 1,000 people.” Jarvis said. Th
Economy
FOMC policymakers to hold rates amid inflation concerns
The United States Federal Reserve signalled it will maintain its current interest rate policy until inflation shows clearer signs of improvement, according to minutes from the Federal Open Market Committee’s (FOMC) January meeting. Policymakers reiterated their cautious stance, indicating that rates will stay at a restrictive level if inflation remains elevated and economic conditions hold steady. The Fed’s benchmark interest rate remains in the 4.25%-4.5% range. Officials noted various risks to inflation, including potential changes in trade and immigration policies under the Trump administration, as well as geopolitical uncertainties that could impact supply chains. While inflation is expected to continue its decline towards the Fed’s 2% target, some members warned of upside risks, particularly from strong consumer spending. The minutes, released on Wednesday (Thursday AEDT) said, “Many participants noted that the Committee could hold the policy rate at a restrictive level if the economy remained strong and inflation remained elevated, while several remarked that policy could be eased if labour market conditions deteriorated, economic activity faltered, or inflation returned to 2% more quickly than anticipated.” The
Economy
Tariffs on pharmaceuticals, cars and chips, says Trump
United States President Donald Trump has announced plans to impose a 25% tariff on imported automobiles, along with steep duties on pharmaceuticals and semiconductor chips. "I probably will tell you that on April 2, but it'll be in the neighbourhood of 25%," Mr. Trump told reporters at Mar-a-Lago, in Palm Beach, Florida. The announcement was reported by multiple news outlets, including EconoTimes, Newsbytesapp, and CBS News. This move is part of his broader trade agenda aimed at reshaping global trade dynamics. Trump has long criticised foreign tariffs on U.S. automotive exports, particularly the European Union’s 10% vehicle import duty. This is four times the U.S. passenger car rate. The proposed auto tariffs are expected to take effect as early as 2 April, following reports from his cabinet outlining tariff options. Trump's decision aligns with his strategy to encourage companies to manufacture in the U.S. to avoid penalties. Tariffs have been part of Trump's measures since taking office. These include tariffs on Chinese imports and steel and aluminum imports. This latest move has significant implications for global trade and could heighten tensions with trade partners.
Economy
Interest rates: RBNZ snips 50bp; pace of more cuts slows
New Zealand's central bank is set to slow the pace of interest-rate cuts after implementing a third consecutive 50-basis-point reduction, citing expectations that lower borrowing costs will drive an economic recovery. The Reserve Bank of New Zealand (RBNZ) cut the Official Cash Rate (OCR) to 3.75% from 4.25%, in line with market expectations. Governor Adrian Orr indicated that future cuts are likely to be smaller, with the central bank projecting two 25-basis-point reductions at its April and May meetings. While Orr expressed confidence in containing inflation, the RBNZ’s latest projections anticipate a rise to 2.7% later this year, potentially prompting policymakers to adjust their easing strategy. Rising trade uncertainties, including the impact of U.S. President Donald Trump’s tariff policies, also add to inflation risks. The RBNZ’s projections show the average OCR declining to 3.14% by the end of 2025, lower than the 3.55% forecast in its November statement. In its policy statement, the RBNZ remained confident that inflation was stabilising around target levels, despite some near-term fluctuations. “The Committee is well placed to maintain price stability over the medium term. Having consumer price inflation