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Turkish Lira is under pressure after the recent move by the U.S. to impose sanction to the country over its purchase of Russia’s S-400 missile defense system. The two (2) NATO (North Atlantic Treaty Organization) allies have been in a row for months, with Washington arguing that the Russian-made defense system are not compatible with U.S. F-35 fighter jets, forcing President Trump to suspend Turkey in the F-35 program. This was amid the better-than-expected economic data for Turkey, which suggests that the country may be turning from its painful downturn that has left millions out of work and sparked a voter backlash against President Recep Tayyip Erdogan. Turkey’s recent recession was triggered by Trump after he imposed his first sanction against Turkey over concern with the delivery of the S-400. Despite the better results, economists still predict the country to experience contraction in the second half of the year.
New Zealand Finance Minister Grant Robertson said the country’s slowing economy will likely to respond to policy maker’s efforts to rekindle growth and that the Royal Bank of New Zealand (RBNZ) is unlikely to resort to unconventional policies. The central bank cut its benchmark interest rate in August in response to the escalating trade war between the United States and China. New Zealand is exposed with these two (2) economies, which causes the New Zealand Dollar to be dragged. On the other hand, the European Union will likely cut its interest rate or used unconventional method to weaken its currency and prevent its economy from heating. Aside from this, the bloc’s largest economy, Germany, is in the midst of a possible recession and the EU needs to act to prevent the crash of the Single Currency. Christine Lagarde will be challenged to contain the economic slowdown in Europe after she ascended to ECB presidency.
The Australian economy is tepid, with consumer spending the weakest in ten (10) years, business investment is shrinking, and the country’s government spending surged to its highest in 15 years. Australian Treasury believed its economy is capable of growing at a sustained annual pace of 2.75%, yet the growth rate in the past quarter is reported to be only at 1.4%, only half than what treasury expects. The economic growth was also at its lowest since the Global Financial Crisis of 2008. Australia’s Coalition government now wants an explanation from the Reserve Bank of Australia (RBA) why it failed to keep the economy from growing above 2% each year. The failure by the country’s central bank might push them to further cut their interest rate. On the other hand, New Zealand Finance Minister believed that the recent interest rate cut is sufficient enough to uplift the country’s economy and will not need to cut its rate to negative.
The European Union and Mercosur headed by Brazil recently agreed to a draft deal, which will eventually lead to the two (2) economies signing a bilateral trade agreement, ending the 20 years of negotiation. However, these 20 years may restart to another 20-year negotiation once again with the narrowing relationship between Germany, France, and Brazil. This was amid the actions and policies by Bolsonaro government, which threatens the Amazon rainforest. Recently, Amazon’s wildfire became a hot topic, which even reached the meeting of the Group of Seven (G7), with the Germano-Franco Alliance condemning Brazil’s no-action on the issue. The Amazon rainforest is crucial in the European Union as the region experienced the worst temperature in years. In line with this, Brazil Economy Minister Paulo Guedes called the French first lady Bridgette Macron as “truly ugly”.