Latest / Early Edition with Ryan Bridge / Mary Jo Vergara: Kiwibank Senior Economist ahead of the third quarter GDP release

Transcript

Mary Jo Vergara: Kiwibank Senior Economist ahead of the third quarter GDP release · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Continuing this week's economic theme of dark economic times. GDP
• 0:05
  Speaker 1: numbers are out later this morning. Not expected to be good.
• 0:07
  Speaker 1: All of our banks are expecting are economy contracted in
• 0:10
  Speaker 1: Q three by about point three down to point four,
• 0:12
  Speaker 1: which is er point three to point four percent, which
• 0:15
  Speaker 1: would put the country back into a recession for the
• 0:19
  Speaker 1: I don't know third time. I'm not sure. Mary Joe
• 0:22
  Speaker 1: Vagara is Vigarda is the KII Bank senior economist and
• 0:25
  Speaker 1: joins you, Now, how are Mary.
• 0:26
  Speaker 2: Joe Modernna, how are you?
• 0:28
  Speaker 1: I'm good? What do you reckon? Is it going to be?
• 0:30
  Speaker 1: Is it going to be another recession?
• 0:32
  Speaker 2: That is what we're We're picking a return to a
• 0:35
  Speaker 2: technical recession. So that would be a point three percent
• 0:38
  Speaker 2: contraction over the September quarter that follows another contraction over journey.
• 0:43
  Speaker 1: You know, yesterday when we had all this dismal news
• 0:45
  Speaker 1: out of Hayefu, there were two types of people that
• 0:48
  Speaker 1: we talked to. One are going, yeah, well, times are tough,
• 0:50
  Speaker 1: but there are green sprouts in the economy. You know,
• 0:53
  Speaker 1: they had some optimism and there is others that went, well,
• 0:55
  Speaker 1: we'll be paying for this by our children and our
• 0:57
  Speaker 1: children's children and their children's children and we're down the
• 0:59
  Speaker 1: good good Where do you stand?
• 1:02
  Speaker 2: I think for the economy, next year should be a
• 1:05
  Speaker 2: better year. So we're a bit more optimistic. But you know,
• 1:08
  Speaker 2: you say it's optimus bracket, it's just realistic. We've been
• 1:11
  Speaker 2: in a recession for the last two years, especially on
• 1:13
  Speaker 2: a per capita basis. But where there's a bank now
• 1:16
  Speaker 2: cutting interest rates, that should you know, start to see
• 1:19
  Speaker 2: growth return in the second half of next year in
• 1:22
  Speaker 2: terms of the you know, fisc outlook at words to
• 1:25
  Speaker 2: perirade it. And that's just following the pattern of what
• 1:28
  Speaker 2: we've seen in the last few years.
• 1:30
  Speaker 1: What about international pressures, because the fairs are picking to
• 1:33
  Speaker 1: they're going to be cutting the rates. It sounds like
• 1:35
  Speaker 1: as well, could that help us?
• 1:38
  Speaker 2: Yeah, when the global economy improves, we do too. We're
• 1:42
  Speaker 2: a small locan economy, so we're heavily reliant on what
• 1:44
  Speaker 2: happens overseas. So when that starts to pick up, which
• 1:48
  Speaker 2: we do expect next year, that's another reason why we
• 1:50
  Speaker 2: expect cloth in New Zealand to pick up as well.
• 1:53
  Speaker 2: Obviously it helps our exporters in that regards.
• 1:57
  Speaker 1: What about the issue of productivity, I mean, while we
• 1:59
  Speaker 1: all blame the government for where we are at. Private
• 2:02
  Speaker 1: debt far exceeds in public and government debt. And we are,
• 2:06
  Speaker 1: of course the business community, and it's up to us
• 2:09
  Speaker 1: to actually get our productivity up. How can we do this?
• 2:12
  Speaker 1: How can we help?
• 2:14
  Speaker 2: Oh, it's definitely just an infrastructure story. We've just under
• 2:18
  Speaker 2: arrested an infrastructure for I don't even know how long,
• 2:21
  Speaker 2: and that has been you know, harboring our productivity. We
• 2:25
  Speaker 2: really need to lift that. It's part of the reason
• 2:27
  Speaker 2: why we've had recession so tough. Yes, we've imployed a
• 2:31
  Speaker 2: lot of people, but our layer productivity is very poor.
• 2:34
  Speaker 2: That's part of the reason why we've had such a
• 2:36
  Speaker 2: volatile a few years.
• 2:38
  Speaker 1: And is government the cutting of government spending Is that
• 2:41
  Speaker 1: a silver bullet or do we need much more, much
• 2:45
  Speaker 1: more weapons in our arsenal?
• 2:47
  Speaker 2: Yeah? I think government spending it needs to be directed
• 2:50
  Speaker 2: into that productivity space, into that infrastructure, you know, building
• 2:54
  Speaker 2: new roads, building hospitals and schools and all of that.
• 2:58
  Speaker 2: That'll I think in a time of recession you need
• 3:02
  Speaker 2: the government to kind of come in and boost boost
• 3:06
  Speaker 2: the economy. And cutting and cutting spending it kind of
• 3:10
  Speaker 2: just makes the situation bit worse.
• 3:12
  Speaker 1: Yeah, thank you so much, Marry Joe Vagada. And that's
• 3:14
  Speaker 1: pretty similar to what Cameron Vagri said at the beginning
• 3:17
  Speaker 1: of the week and said, yes, we do have to
• 3:18
  Speaker 1: cut government spending, but at the same time we also
• 3:21
  Speaker 1: have to invest. The government has to invest. It's a
• 3:23
  Speaker 1: big player. Look at the construction industry. You know, they
• 3:26
  Speaker 1: invest in school buildings and hospitals, et cetera, and then
• 3:29
  Speaker 1: that money ends out in the hands of the construction industry.
• 3:32
  Speaker 1: Look what's happened to the construction industry as we've cut
• 3:35
  Speaker 1: down on that construction from the government money. So everything
• 3:39
  Speaker 1: is into LinkedIn, everything is intertied. For more from Early
• 3:43
  Speaker 1: Edition with Ryan Bridge. Listen live to News Talks it
• 3:46
  Speaker 1: be from five am weekdays, or follow the podcast on iHeartRadio.