easing measures adopted in new zealand indonesia japan and china 1256392015

As growth slows, central banks and governments try to pep up economies

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By :  ,  Financial Analyst

New Zealand implemented today (September 10) its third interest rate cut this year, trimming its official cash rate by another 0.25 per cent to 2.25 per cent. The move followed similar reductions in June and July, and according to the New Zealand central bank, more could follow down the line.

"A reduction in the OCR is warranted by the softening in the economy and the need to keep future average CPI inflation near the 2.0 per cent target midpoint," bank governor Graeme Wheeler said, according to the Business Times. "At this stage, some further easing in the OCR seems likely. This will depend on the emerging flow of economic data."

Economic activity in New Zealand is tapering off after the multi-billion dollar reconstruction in Christchurch following the 2011 earthquakes.

"Domestically, the economy is adjusting to the sharp decline in export prices, and the consequent fall in the exchange rate," Mr Wheeler said.

In Indonesia, President Joko Widodo on Wednesday (Sep 9) launched various measures aimed at boosting economic growth and supporting the country’s declining currency.

The President said over 89 regulations were being tweaked to simplify doing business and thereby provide an “economic jump forward.” In a move to help the poor he unveiled measures for the provision of cheaper fuel to fishermen, more funding support to villages and bolstering a program that would provide cheap rice, according to Channel News Asia.

The reform package also included moves to help exporters with financing and easing regulations to allow for frequent foreign visitors to Indonesia to quickly open bank accounts. The governor of the country’s central bank separately announced measures to boost the value of the rupiah, including the systematic management of foreign exchange flows.

Previously, the President had announced tax breaks for some industries and in August had reshuffled key economic ministers.

On Wednesday, China too announced that it would adopt stronger fiscal policies that would boost growth, as the country moved to allay global fears about its economic growth.

The Chinese Finance Ministry said it would follow a "proactive fiscal policy, fine-tune the measures in a timely manner and accelerate reforms that will help stabilize growth". The government intends to fast-track major construction projects, extend tax cuts to many smaller companies, and encourage private capital to invest in key areas of the economy.

On Monday, China said it would remove personal income tax on dividends earned on stocks that had been held for over a year – a move designed to encourage investors to take a long-term view on stocks rather than indulge in short-term speculation.

Japanese Prime Minister Shinzo Abe said Wednesday that he would follow through on a corporate tax cut of at least 3.3 percentage points in the next year and would try to improve on that, if possible. "We will push forward in reducing the rate down into the twenties over several years, bringing it to a level that compares favorably in the international context," Abe said, according to Bloomberg. "We will change Japan into a country that is able to keep growing.”

On Wednesday, the Nikkei-225, the benchmark Japanese equity index, shot up 1,343 points, or 7.71 per cent, in its best ever single day gain after the global financial crisis.

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