Latest / Best of Business / Brad Olsen: Infometrics Principal Economist on the reports showing NZ's economy is improving

Transcript

Brad Olsen: Infometrics Principal Economist on the reports showing NZ's economy is improving · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from news Talk zed B.
• 0:12
  Speaker 1: Follow this and our wide range of podcasts now on iHeartRadio.
• 0:16
  Speaker 2: Quarter three GDP up one point one percent. Nikola Willis
• 0:20
  Speaker 2: is cracking the champagne a little early for Christmas. A
• 0:23
  Speaker 2: huge turnaround from the second quarter when the economy shrank
• 0:26
  Speaker 2: one percent. Looking at the past year, we were actually
• 0:30
  Speaker 2: a bit smaller, point four percent smaller than in the
• 0:33
  Speaker 2: year two September twenty four. Brad olsin Informetrics principal economist
• 0:36
  Speaker 2: is with me tonight, Brad, Good evening, Good evening. Quite
• 0:39
  Speaker 2: a turnaround there.
• 0:41
  Speaker 3: It was quite a turnaround. But you're right that realistically
• 0:44
  Speaker 3: the economy is still not necessarily been growing by leaps
• 0:47
  Speaker 3: and bounds. It's more tried to fill in the hole
• 0:49
  Speaker 3: that we had earlier this year. There was a little
• 0:52
  Speaker 3: bit more activity at the start of the year, of course,
• 0:55
  Speaker 3: a bit more of a cratering in the second quarter,
• 0:57
  Speaker 3: and then abouts back in September. So that's good and
• 1:00
  Speaker 3: I think probably the most pleasing part of that result,
• 1:03
  Speaker 3: and I don't want to overreg it, but you did
• 1:05
  Speaker 3: see that fourteen of the sixteen measured industries that step
• 1:08
  Speaker 3: since ZID looks at did see an improvement, so it
• 1:10
  Speaker 3: was a bit more broad based over all of the figures,
• 1:13
  Speaker 3: which is encouraging. You know, you were seeing a lift
• 1:16
  Speaker 3: in the likes of manufacturing, you were seeing more coming
• 1:18
  Speaker 3: through from professional and business services, so that was encouraging.
• 1:22
  Speaker 3: That Again, momentum is starting to build, but it's building
• 1:24
  Speaker 3: from a weak spot. So we're certainly not saying that,
• 1:27
  Speaker 3: you know, the economy is completely back, but it is
• 1:30
  Speaker 3: on a better track.
• 1:31
  Speaker 2: And that's the point important point to make, isn't it
• 1:34
  Speaker 2: that while the numbers, if you look at the number
• 1:36
  Speaker 2: as a nominal figure, we're growing three times as fast
• 1:39
  Speaker 2: in this quarter than as the Australians. We're growing as
• 1:42
  Speaker 2: fast as China in this quarter. But it won't feel
• 1:45
  Speaker 2: like that because we're coming off a very low base,
• 1:48
  Speaker 2: well exactly.
• 1:49
  Speaker 3: And look if you look at you know, the Australian
• 1:51
  Speaker 3: figures are compared to where we were you know, last time,
• 1:55
  Speaker 3: so you know New Zealand was down you know, one percent,
• 1:59
  Speaker 3: whereas the Australians they were still growing and so if
• 2:02
  Speaker 3: you sort of look at them all together, they grew
• 2:05
  Speaker 3: i think point six percent on the second quarter. We
• 2:07
  Speaker 3: were down one percent we've then come back one point
• 2:10
  Speaker 3: one percent. In this cord it they were up point four.
• 2:12
  Speaker 3: So you add them together, we're basically in a pretty
• 2:14
  Speaker 3: similar position. We just had to go through a world
• 2:16
  Speaker 3: of pain to sort of get there where they've had
• 2:18
  Speaker 3: sort of more consistent growth. And that's probably the piece
• 2:21
  Speaker 3: we're looking for a lot more next year, is can
• 2:23
  Speaker 3: we just get a bit more consistency. Everyone's asking, of course,
• 2:26
  Speaker 3: for better economic numbers, and yes, that's totally true, but
• 2:30
  Speaker 3: you also need a bit more of that consistency before
• 2:32
  Speaker 3: businesses and households really buy into an economic recovery and say, look,
• 2:36
  Speaker 3: it's actually happening, happening, I can plan my life around it,
• 2:39
  Speaker 3: rather than everyone going well, look it was good now,
• 2:41
  Speaker 3: but then it might sort of pull back and then
• 2:42
  Speaker 3: it might be better in the future. That sort of
• 2:44
  Speaker 3: stop start element of the economy is not helpful going forward,
• 2:48
  Speaker 3: and so these figures, being broad based, do support a
• 2:51
  Speaker 3: little bit more of that uptick as we head through
• 2:52
  Speaker 3: into twenty twenty six.
• 2:53
  Speaker 2: Where do we need to worry too much about fon
• 2:55
  Speaker 2: Terra downgrading, it cutting its forecast. I mean, we know
• 2:58
  Speaker 2: the price has been dropping on the global dairy trade options,
• 3:01
  Speaker 2: But do we need to be worried about the fact
• 3:02
  Speaker 2: that this is coming down? Does that affect the growth
• 3:05
  Speaker 2: for next year?
• 3:06
  Speaker 3: Look, it doesn't make it quite as easy to make
• 3:08
  Speaker 3: that sort of same growth profile. But equally, look this
• 3:11
  Speaker 3: has been signaled when Fontira came out with their first
• 3:14
  Speaker 3: price for the year, they deliberately had it a bit
• 3:17
  Speaker 3: more open and sort of signaled that look of things
• 3:19
  Speaker 3: turned around, then we could be getting back to these
• 3:21
  Speaker 3: sort of levels. It's still a decent payout. I mean,
• 3:24
  Speaker 3: for goodness sake, it's still over nine bucks. That's a
• 3:26
  Speaker 3: good number, but it does start to again just trim
• 3:29
  Speaker 3: it a back a bit. And we know that the
• 3:31
  Speaker 3: primary sector, although they have had more money in recent
• 3:34
  Speaker 3: times coming through, they haven't necessarily spent it straight away.
• 3:37
  Speaker 3: So look, you're still seeing some good recovery in parts
• 3:39
  Speaker 3: of provincial and rural New Zealand. But I think it
• 3:42
  Speaker 3: just goes to show that we sort of can't bank
• 3:44
  Speaker 3: on any one bit being the silver bullet for economic
• 3:46
  Speaker 3: growth in the next year. It does have to be
• 3:48
  Speaker 3: a little bit more across the board, and those global shops,
• 3:51
  Speaker 3: those global factors that we can't control at home are
• 3:54
  Speaker 3: still things that we're going to have to watch out for.
• 3:56
  Speaker 2: Thank you Brad brad Olson and for metrics. They by
• 3:58
  Speaker 2: the way, the Fonterra price forecast cut from nine p
• 4:03
  Speaker 2: fifty down to nine dollars their midpoint. And as I said,
• 4:06
  Speaker 2: the global dairy trade options have been coming. But if
• 4:08
  Speaker 2: you look, prices down for since the May peak are
• 4:14
  Speaker 2: down a quarter and Fonterra's price now down since the
• 4:18
  Speaker 2: start of the season ten percent, and supply obviously has
• 4:21
  Speaker 2: been going up. What does it do to on farm costs,
• 4:27
  Speaker 2: on farm profits. We'll talk to Jamie mckaye, host of
• 4:30
  Speaker 2: the Country After Six on that later.
• 4:33
  Speaker 1: For more from News Talk sed B. Listen live on
• 4:35
  Speaker 1: air or online, and keep our shows with you wherever
• 4:38
  Speaker 1: you go with our podcasts on iHeartRadio