Sichuan earthquake and inflation

http://www.interest.co.nz Chinese earthquake and what it means for global economy and New Zealand Economics the Dismal science Death toll over 11,900 in Sichuan earthquake But what does it mean for inflation and demand for commodities from China This matters because China is our third largest trading partner and the RBNZ Is watching inflation closely in Asia and Australia, our largest trading partner Australia is exporting the iron ore, coal, nickel and other minerals that power China's industrialization China now biggest consumer of concrete and steel in the world So when an earthquake hits and causes so much destruction, it's worth trying to understand what it means for the global economy Citigroup estimates earthquake hit regions generate 18% of Chinese GDP But it sees the biggest impact on inflation Reconstruction demand will increase already hot demand for steel and concrete and construction workers China has ordered the closure of mines and gas fields Sichuan produces 22% of China's gas 1% of China's power output was shut down because of the earthquake Citigroup sees inflation pressures growing Annual Inflation hit a 10 year high of 8.5% in April, just off a 12 year high of 8.7% high in February China's central bank increased its reserve requirements for banks, but many say it needs to allow a significant increase in the renminbi and interest rates to really slow the economy

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YouTube | May 14, 2008

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