Macroeconomics

The US economy continues to see light at the end of the tunnel. 1Q GDP registered a 5.5% contraction instead of 5.7% decline estimated earlier (4Q: -6.3%). The smaller contraction was due to upward revision to inventory investment and a downward revision to imports. Initial jobless claims however unsurprisingly increased last week to 627k from 612k a week earlier, reflecting a still sluggish labor market.

· On the contrary, New Zealand’s GDP fell more than expected by 1% in 1Q, exceeds the -0.7% forecast and extending a fifth straight quarter of declines. New Zealand’s economy is unlikely to grow until the final three months of 2009 as the recession curbs exports and damps investment, prompting Reserve Bank Governor Alan Bollard to possibly keep interest rates at record lows until late next year to kick-start spending.

· In Eurozone, companies cut demand for machinery, transport equipment and consumer appliances, pushing industrial orders lower by 1% in Apr. Consumer prices in Japan contracted at the fastest pace on record in May on lower energy prices and rising unemployment.

· Weak global trade continues to depress exports of Asian economies. Hong Kong’s exports dropped 14.5% YOY in May, a seventh consecutive monthly fall as demand for Chinese products shipped through the city eased. Imports fell 19.2% YOY, resulting in a trade deficit of HKD11bn. Exports in Vietnam also decreased at a faster pace of 10.1% in Jun compared to 6.8% in May.