Monthly Economic Review

January 2017 | Released on 30 March 2017

The IMF in its January 2017 update on World Economic Outlook has indicated a stronger global growth projection of 3.4% in 2017 compared to a growth of 3.1% in 2016, supported by growth in the advanced economies. U.S. inflation rose by 2.5% in January 2017, notably the biggest increase in nearly four years due to higher household prices particularly for gasoline and other goods. This compared to a 2.1% rise in the previous month. The U.S. unemployment rate rose to 4.8% in January from 4.7% in the previous month despite an expanding labor market as more jobs were created. In contrast, Australia recorded a lower unemployment rate at 5.7% down compared with 5.8% in December as a surge in part-time jobs offset a slump in full-time work. Australia’s trade surplus narrowed significantly by almost two-thirds due mainly to lower consumer goods exports. New Zealand’s merchandise trade deficit widened by NZD$249 million in January 2017 largely due to higher oil imports.

Despite the slowdown in January, the NRBT’s outlook for strong domestic economic activity remains in the medium term. The level of foreign reserves is also expected to remain comfortable supported by expected higher receipts of remittances and foreign aid, despite the projected rise in imports. Upward inflationary pressure remains in the near term due to amendments made to custom duty and excise tax effective on 1st July 2016 but expected to be well below the NRBT’s inflation reference rate of 5% per annum in 2017/18. The banking system remained sound. The NRBT will continue to closely monitor developments in the domestic and global economy, and update its monetary policy setting to maintain internal and external monetary stability, and to promote a sound and efficient financial system in order to support macroeconomic stability and economic growth.

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