Veracity of Chinese Output data and Renminbi Valuation

The reliability of Chinese official statistics is the topic of a recent Economist article (An aberrant abacus, May 1, 2008). Given its sheer size and diversity, it is understandably difficult to compile China’s Gross Domestic Product (GDP) figures. The contentious issue is whether the Chinese government deliberately overstates GDP figures. For instance, some commentators accused […]

Rule and reform: China vs India

In November I took part in a conference at Harvard University, comparing governance and economic reform in the “giants”, China and India. Their size, growth rates and long-run potential beg for comparisons, despite the differences in the two countries’ political systems and economic structures. The big question, one which loomed over the conference, somewhat unspoken, […]

New Zealand Housing Boom Ends: Subprime Crisis Next?

During the past five years, a constellation of factors drove an unprecedented housing boom in New Zealand. The boom fizzled out this year but left behind a set of factors that raise the risk of housing sector weakness spreading to the rest of the economy. In some respects, New Zealand looks more vulnerable to a housing-led financial crisis than the U.S.: New Zealand (NZ) exhibits higher household indebtedness (debt to disposable income: 160% in NZ vs 131% in US, 2007) a larger current account deficit as a share of GDP (8% in NZ vs 6% in US, 2007), a higher share of housing in household assets (72% in NZ vs 39% in US*, June 2007), stronger house price inflation (median home price: US$266,964 in NZ vs US$238,000 in US, September 2007) and a higher benchmark interest rate (8.25% Overnight Cash Rate in NZ vs 4.50% Fed Funds Rate in US, November 2007) with a more justifiably hawkish central bank. This brief discusses the rise and fall of the New Zealand housing market, its outlook, and how the US crisis might throw the match that lights New Zealand’s financial tinderbox.

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