Latest / Early Edition with Ryan Bridge / Henry Russell: ANZ Economist on the latest GDP figures putting New Zealand into a recession

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Henry Russell: ANZ Economist on the latest GDP figures putting New Zealand into a recession · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: Gdpigures were worse than we thought. It fell by one
• 0:02
  Speaker 1: percent in the three months ending September to be one
• 0:05
  Speaker 1: point five percent lower than a year ago. The year
• 0:07
  Speaker 1: this officially makes it the biggest recession since nineteen ninety one.
• 0:11
  Speaker 1: The GDP and Q two being revised down. Henry Russell
• 0:15
  Speaker 1: is the A and Z economist and joins you right
• 0:17
  Speaker 1: now looking at this car crash, Henry, how did you feel?
• 0:22
  Speaker 2: Well? There was certainly some shock factor yesterday when we
• 0:25
  Speaker 2: saw the numbers. It really is to do with these
• 0:29
  Speaker 2: large revisions we've seen in the last two quarters, and
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  Speaker 2: as you note, this is now the largest contraction of
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  Speaker 2: six month period going back to nineteen ninety one. That
• 0:37
  Speaker 2: being said, you know, one might take from that that
• 0:41
  Speaker 2: things that they're slowdown has certainly been much worse than fared,
• 0:45
  Speaker 2: but it hasn't necessarily changed our expectation on what lies ahead.
• 0:49
  Speaker 2: If you think about these data, they cover a period
• 0:52
  Speaker 2: that finished nearly three months ago. Now, in that time,
• 0:54
  Speaker 2: the Reserve Bank has delivered one hundred basis points of
• 0:57
  Speaker 2: cuts and we're seeing signs that the economy is or
• 1:00
  Speaker 2: responding in high frequency indicators. So the hope is that
• 1:04
  Speaker 2: this does bring to a close the economy's traveling period
• 1:08
  Speaker 2: over the past couple of years, and we will see
• 1:09
  Speaker 2: a return to growth in the coming quarter.
• 1:11
  Speaker 1: Should the government be investing more? And I say this
• 1:16
  Speaker 1: because Cameron bagg We said at the beginning of the week,
• 1:18
  Speaker 1: you know, they've got to cut their spending, but they've
• 1:20
  Speaker 1: also got to keep you know, firing on their part
• 1:22
  Speaker 1: of the economy because they have a responsibility to do that.
• 1:24
  Speaker 1: And of course the CEE to you, who you know,
• 1:26
  Speaker 1: left leaning anyway, I say, oh, you should be investing
• 1:29
  Speaker 1: in during a recession because it's never been cheaper, which
• 1:31
  Speaker 1: I don't know where they got that from, but whatever.
• 1:33
  Speaker 1: Should they be continuing to spend, but it's going to
• 1:35
  Speaker 1: be wise spending.
• 1:37
  Speaker 2: I think it is important to note that, you know,
• 1:40
  Speaker 2: going back to what the Treasury said in the half
• 1:42
  Speaker 2: year update on Tuesday, the government is running structural fiscal
• 1:46
  Speaker 2: deficits for as far as the eye can see. And secondly,
• 1:51
  Speaker 2: the stabilizing stabilizing the economy is not necessarily the role
• 1:55
  Speaker 2: for government. It is actually the responsibility of the Reserve
• 1:59
  Speaker 2: Bank through interest rates and the reason and the reserve
• 2:02
  Speaker 2: banks certainly could cut interest rates further based on the
• 2:06
  Speaker 2: data yesterday, but there's still some lingering inflation challenges out there.
• 2:10
  Speaker 2: The Reserve Bank will need to weigh that against design
• 2:13
  Speaker 2: the economies responding. So while we are traditionally fiscal policy
• 2:19
  Speaker 2: should be countercyclical in nature, and by that use the
• 2:22
  Speaker 2: government should be spending during slowdowns or that's traditionally what's happened,
• 2:26
  Speaker 2: but there's no money left in the kiddy. Essentially, we
• 2:32
  Speaker 2: do need to go through this period of consolidation because
• 2:35
  Speaker 2: there is going to be another shock on the horizon
• 2:38
  Speaker 2: at some point, and if we continue on the path
• 2:41
  Speaker 2: we're on, we are not going to be able to
• 2:44
  Speaker 2: respond to that crisis as may be necessary. So there Reserve,
• 2:49
  Speaker 2: I mean, the government certainly needs to balance both both
• 2:52
  Speaker 2: sides of that.
• 2:54
  Speaker 1: Well said, Henry, enjoy your Christmas as well, Thank you
• 2:56
  Speaker 1: so much for waking up early for us, and go
• 2:58
  Speaker 1: well Merry christmasy Man very Christmas.
• 3:02
  Speaker 2: Yeah.
• 3:02
  Speaker 1: I see that the Bank of England has kept interest
• 3:04
  Speaker 1: rates the OCR at four point seventy five percent and
• 3:07
  Speaker 1: the warning of stagflation for England. They are bad. There
• 3:10
  Speaker 1: are bad economic newses all over the world right now.
• 3:13
  Speaker 1: There's all sorts of flows. Could there be war, could
• 3:16
  Speaker 1: there be another earthquake, Could there be all sorts of stuff.
• 3:19
  Speaker 1: We need to get the house in order, even though
• 3:21
  Speaker 1: it hurts. I'm sorry. I'm sorry.
• 3:23
  Speaker 2: For more from Early Edition with Ryan Bridge.
• 3:26
  Speaker 1: Listen live to news Talks it'd be from five am weekdays,
• 3:30
  Speaker 1: or follow the podcast on iHeartRadio.