Latest / Best of Business / Nick Tuffley: ASB Senior Economist on the revised economic outcome forecasts, impact of Middle East conflict

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Nick Tuffley: ASB Senior Economist on the revised economic outcome forecasts, impact of Middle East conflict · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from Newstalk ZEDB. Follow this
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• 0:16
  Speaker 2: So the banks are now lining up with the renewed
• 0:18
  Speaker 2: economic forecast for the year. Now that the furies up
• 0:20
  Speaker 2: end of the equation ASB is cut GST, we're down
• 0:23
  Speaker 2: to about not GST, GDP down to about one point three.
• 0:27
  Speaker 2: Recovery is now twenty twenty seven. Q two is going
• 0:29
  Speaker 2: to go backwards. Inflation could hit four. Nick Toughly is
• 0:32
  Speaker 2: the asb's chief economist back with us. Nick, morning to you,
• 0:36
  Speaker 2: Good morning. How much of a rolling mall is this?
• 0:38
  Speaker 2: And we can I could get you back tomorrow and
• 0:39
  Speaker 2: you could say something completely different.
• 0:42
  Speaker 3: Well, I think we're going to be dealing with uncertainty
• 0:45
  Speaker 3: for a while. So yes, whilst we've put out forecasts
• 0:48
  Speaker 3: at the moment, the thing I think people need to
• 0:50
  Speaker 3: be focusing a lot on is scenario analysis and contingency
• 0:53
  Speaker 3: planning to just get a better idea of how different
• 0:56
  Speaker 3: outcomes could impact on their business so they can just
• 0:59
  Speaker 3: get ready for it.
• 1:00
  Speaker 2: Is Q two definitely a miss.
• 1:04
  Speaker 1: For us.
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  Speaker 3: We do have a slight negative. It's just really when
• 1:08
  Speaker 3: the I guess like the peak impacts of the shocks
• 1:10
  Speaker 3: are sort of really hitting. That's the sort of first
• 1:12
  Speaker 3: quarter we're getting the sort of full impact of all
• 1:14
  Speaker 3: these higher prices at the pump. That will be sort
• 1:18
  Speaker 3: of rippling through and having an impact, particularly on consumer's
• 1:20
  Speaker 3: ability to spend over that quarter.
• 1:22
  Speaker 2: And what you read on the psychology of all of this,
• 1:25
  Speaker 2: will we freak out? And if we do, is that material.
• 1:30
  Speaker 3: We do run the risk, as we always do when
• 1:33
  Speaker 3: you have a shock like this or that period of
• 1:35
  Speaker 3: just uncertainty and people hitting the pause button. I think
• 1:38
  Speaker 3: the challenge with this is until we get some resolution
• 1:41
  Speaker 3: over oil supplies, it leaves everybody a little bit up
• 1:44
  Speaker 3: in the air. So it makes it very hard for
• 1:47
  Speaker 3: people to pay for the longer term at a time
• 1:49
  Speaker 3: like this.
• 1:50
  Speaker 2: Can I say that glass half fall if you're right,
• 1:53
  Speaker 2: If you're spot on, and we get GDP at one
• 1:55
  Speaker 2: point three not what it was, but not the end
• 1:57
  Speaker 2: of the world. It's still growth and inflation at for
• 1:59
  Speaker 2: once again, not the end of the world. That's not
• 2:01
  Speaker 2: the end of the world at all.
• 2:02
  Speaker 3: Is it. It's not the end of the world, but
• 2:05
  Speaker 3: it is sort of really delaying that recovery. Again on
• 2:09
  Speaker 3: the scenario that we've got there, we'd still be growing,
• 2:12
  Speaker 3: it would be will be slowly. It's sort of really
• 2:13
  Speaker 3: pushed out the recovery until late this year instead of
• 2:16
  Speaker 3: it continuing over the course of the year. And we've
• 2:20
  Speaker 3: had inflation higher than four percent before, were not just
• 2:23
  Speaker 3: a few years ago, but even just right before the
• 2:25
  Speaker 3: financial crisis, when all prices were high, we were hitting
• 2:28
  Speaker 3: five percent. Still could conceivably hit that this year, but
• 2:32
  Speaker 3: we're in an environment where the Reserve Bank does have
• 2:35
  Speaker 3: just time to wait, given that the recovery was still
• 2:38
  Speaker 3: relatively in the early stage and we went exactly overheating.
• 2:41
  Speaker 2: But what about places like Australia who come out yesterday,
• 2:43
  Speaker 2: they they're going to stow inflation. If they stow inflation,
• 2:46
  Speaker 2: they're going to kill growth. If they kill growth, one
• 2:49
  Speaker 2: of their big trading partners is going to sub Do
• 2:51
  Speaker 2: you take all that stuff into account as well?
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  Speaker 3: We do our best, and the thing is is what
• 2:55
  Speaker 3: we're going to find is that there's going to be
• 2:57
  Speaker 3: different countries doing different things in response to this and not.
• 2:59
  Speaker 3: You're right in Australia where they have tried to take
• 3:02
  Speaker 3: the edge off the impact for consumers a bit more
• 3:05
  Speaker 3: with a lot more fiscal spending right at a time
• 3:08
  Speaker 3: when the Reserve Bank over there has already lifted rates
• 3:10
  Speaker 3: a couple of times. He does, mean you end up
• 3:12
  Speaker 3: with this pushmi pullyu tug of war?
• 3:15
  Speaker 2: Do you reckon? People? Get that?
• 3:16
  Speaker 3: Now?
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  Speaker 2: Do you reckon our big lesson out of COVID And
• 3:18
  Speaker 2: this goes to the government. I don't want to drag
• 3:19
  Speaker 2: you into politics, but do you reckon people? Get it that? Yes,
• 3:22
  Speaker 2: they could cut anything tomorrow, they could fill your pockets
• 3:25
  Speaker 2: with cash. But we've been there, done that, learned that lesson,
• 3:29
  Speaker 2: and we understand that.
• 3:30
  Speaker 3: Or not, perhaps we do a little bit better. I
• 3:33
  Speaker 3: think when you look back since the financial crisis, through
• 3:36
  Speaker 3: the Canterbury earthquakes, COVID, Look, we've gone through a number
• 3:42
  Speaker 3: of periods. Now we've responded to what we thought as
• 3:44
  Speaker 3: one off crisis and we've ended up running deficits most
• 3:47
  Speaker 3: of that time. And we're just getting less I guess
• 3:50
  Speaker 3: prepared or less resilient sis clean to be able to
• 3:52
  Speaker 3: respond to things. And so we just we have very
• 3:54
  Speaker 3: limited options and think everybody does. Really, you can't just
• 3:57
  Speaker 3: wave a magic wine and make all this go away.
• 3:59
  Speaker 2: Exactly nice talk to you, because always Nick Tumpley, who's
• 4:01
  Speaker 2: the ASV Chief Economist.
• 4:03
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