Every week we bring you the world’s biggest business, currency, and travel stories. This week: Canada’s economy shrank last quarter but things are looking up, house sales in Vancouver fall 26%, Ireland ordered to collect taxes from Apple, Brazils president is impeached, US unemployment remains low, Nigeria shrinks, India grows.
Contraction in Q2, Growth in June
Canada’s economy shrank by 1.6% in Q2 of 2016 largely as a result of low oil prices and the devastating Alberta wildfires. The 1.6% drop is the worst quarter for over 7 years. However the latest figures show that GDP grew in June by 0.6%, suggesting the economy is recovering strongly. The Bank of Canada is expecting annualised growth in Q3 of over 3%.
Trade Deficit Shrinks
Canada’s trade deficit is shrinking as the country is exporting more motor vehicles, motor vehicle parts, minerals, aviation parts, airplanes, and industrial machinery. Overall exports increased by 3.4% while imports fell by 0.1%. The lower value of the loonie may be boosting exports, but a stronger balance of trade will also strengthen the currency.
House Sales Fall
Last month house sales dropped by 26% year on year in Vancouver to what the Real Estate Board of Greater Vancouver calls “normal levels”. Some industry representatives say that it is still too early to tell whether this is the result of the newly imposed 15% foreign homebuyer’s tax, but sales have been dropping ever since it was introduced. The tax was designed to reduce sales, lower property prices, discourage foreign real estate investment and speculation, and make Vancouver affordable for locals. The long term effects of the tax are still not clear.
Apple of my Ireland
The European Commission determined that Ireland offered Apple special tax advantages in violation of EU rules on state aid to companies. The Commission’s ruling ordered Apple to pay EUR 13 billion in back taxes to Ireland. Both Ireland and Apple disagree with the ruling, and are set to challenge it. The US government is also angered by the ruling, as it believes that Apple is using Ireland as a tax haven and that the US should be the rightful recipient of the tax revenue.
US Unemployment Down
The unemployment rate in the US stayed at a very healthy 4.9% as the economy added 151,000 jobs in August. The increase is below the 205,000 jobs that the US economy has added per month over the last year. The US has enjoyed healthy growth since the 2009 recession, and the Fed could soon raise interest rates,
Mylan, an American drug company, gained much public ire as it raised prices of its EpiPen to $608. EpiPens are crucial, life saving devices that administer a large dose of epinephrine to people going into allergic shock. Under pressure from Democratic Presidential Nominee Hillary Clinton, the company agreed to start selling a generic brand for half the cost.
Brazil’s President Dilma Rousseff was impeached by a Senate vote of 61 to 20. Rousseff had manipulated government accounts to disguise the budget deficit. Brazil is in the midst of a serious recession, and the country’s economy shrank for the 9th quarter in a row by 3.8% in Q2 of 2016 – even worse than predictions suggested.
India’s GDP grew by 7.1% in Q2, far ahead of regional rivals China, but below the 7.9% growth earlier this year.
Nigeria’s economy shrank by 2.1% in Q2 throwing the country into recession. Making matters worse, inflation is at over 17%. Low oil prices have taken a huge toll on the country. Until the collapse of oil prices they accounted for 90% of Nigeria’s export revenue.
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