Latest / The SME Stream / Gareth Kiernan: Infometrics Chief Forecaster on the economic recovery looking unconvincing

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Gareth Kiernan: Infometrics Chief Forecaster on the economic recovery looking unconvincing · The SME Stream

• 0:00
  Speaker 1: The recovery twenty twenty six, are we go or not?
• 0:04
  Speaker 1: The manufacturing, the services sector, the confidence, that's all in
• 0:07
  Speaker 1: the right direction, But then inflation three point one, sticky
• 0:10
  Speaker 1: housing banks pulling back on those forecasts. So where are
• 0:12
  Speaker 1: we at? Unconvincing is the word informetrics are using this morning.
• 0:16
  Speaker 1: Gareth Kenan is the chief forecaster of course, and is
• 0:19
  Speaker 1: with Gareth morning weding. Mike, you're breaking my heart. What
• 0:23
  Speaker 1: are you seeing here? What's going on?
• 0:25
  Speaker 2: Well, it's the feeling of deja avou. Really it started
• 0:28
  Speaker 2: twenty twenty twenty five. We were looking at it and going, hey,
• 0:30
  Speaker 2: it's going to get better this year. All the sort
• 0:32
  Speaker 2: of block building blocks are in place. This year we're
• 0:35
  Speaker 2: looking and going, yeah, they're there, They're still there, and
• 0:38
  Speaker 2: some of the indicators are improving and certainly better than
• 0:40
  Speaker 2: we have twelve months ago. But you've still got all
• 0:43
  Speaker 2: these things hanging over us, going, you know, our household's
• 0:46
  Speaker 2: confident enough. Have we got costs of living pressures that
• 0:49
  Speaker 2: are still there? Yes, we do, as the risks and
• 0:52
  Speaker 2: interest rates arising sooner than we previously thought, Yes, there are.
• 0:55
  Speaker 2: So we're trying to convince ourselves as much as anyone else,
• 0:58
  Speaker 2: I thank you?
• 0:58
  Speaker 1: So is this all psychological now? Because I was astonished
• 1:02
  Speaker 1: by that Q three GDP number of one point one
• 1:05
  Speaker 1: mid wind fest last year we were actually growing.
• 1:10
  Speaker 2: Yeah, was coming off of minus one the quarter before though,
• 1:12
  Speaker 2: So you know, you take the six months all together,
• 1:14
  Speaker 2: and we've done nothing right. And that's very much the
• 1:16
  Speaker 2: story of the last sort of two to three years.
• 1:19
  Speaker 2: You're going sideways rather than up. Look, things are improving,
• 1:23
  Speaker 2: but I think the problem for households in particular is
• 1:26
  Speaker 2: just around. You've been told for three years this thing
• 1:29
  Speaker 2: is going to get better, just around the corner, and
• 1:31
  Speaker 2: you're tired of hearing that story, aren't you? And like
• 1:34
  Speaker 2: I say, you've still got those cost of living pressures
• 1:37
  Speaker 2: that we've done a bit of work. And while headline
• 1:39
  Speaker 2: inflation is running at three which isn't a great number anyway,
• 1:42
  Speaker 2: the stuff that you have to spend money on, the essentials,
• 1:44
  Speaker 2: that's still running at four percent, and you're looking at
• 1:47
  Speaker 2: there and going, well, you know, I'm just struggling to
• 1:49
  Speaker 2: make ends meet in some cases. And there's no sign
• 1:52
  Speaker 2: or not much sign. There are some signs, but not
• 1:54
  Speaker 2: much that the labor market is turning around as well.
• 1:56
  Speaker 1: That inflation number seems to be in Australia, seems to
• 1:59
  Speaker 1: be in Britain, seems to be and it seems global,
• 2:02
  Speaker 1: is it? And does that make any difference? And are
• 2:04
  Speaker 1: we any worse off than anyone else?
• 2:07
  Speaker 2: I think I think the issue here is that we
• 2:09
  Speaker 2: probably cut interest rates more than everyone else in an
• 2:12
  Speaker 2: attempt to sort of stimulate the economy, perhaps losing a
• 2:15
  Speaker 2: little bit of a sort of focus on the core
• 2:18
  Speaker 2: task of the Central Bank, which is to keep inflation
• 2:21
  Speaker 2: under control, in a desperate attempt to get growth going. Yes,
• 2:25
  Speaker 2: there are global aspects to it, but the reality is,
• 2:28
  Speaker 2: you know, we haven't got the economy rolling as much
• 2:31
  Speaker 2: as we might have liked from those interest rate cuts.
• 2:33
  Speaker 2: Yet could still happen. There should still be more stimular
• 2:36
  Speaker 2: or stimulus or effect of that coming through this year.
• 2:39
  Speaker 2: But yes, I mean it's a balancing act for the
• 2:42
  Speaker 2: Reserve Bank.
• 2:42
  Speaker 1: I was watching some more on the House at question
• 2:44
  Speaker 1: time yesterday's talking tradables, non tradables, et cetera. On the
• 2:47
  Speaker 1: non tradeables. How much are we shooting ourselves on the
• 2:49
  Speaker 1: foot going back to the rates and the insurance and
• 2:51
  Speaker 1: all that sort of stuff.
• 2:54
  Speaker 2: Look, I mean the government side of it, and some
• 2:57
  Speaker 2: of those sort of administered prices such as electricity, where
• 3:00
  Speaker 2: you know, again it is regulatory stuff that's driving it up.
• 3:03
  Speaker 2: That is part of part of the issue. But there
• 3:05
  Speaker 2: is a sense when we look through some of those
• 3:07
  Speaker 2: other numbers that you know, the spare capacity that there
• 3:09
  Speaker 2: has been in the economy over the last couple of
• 3:12
  Speaker 2: years not really acting as quite the sort of anchor
• 3:15
  Speaker 2: for inflation and bringing some of those sort of cost
• 3:18
  Speaker 2: pressures down as we might have liked. I mean to
• 3:20
  Speaker 2: put it simply, businesses three or four years ago they
• 3:23
  Speaker 2: were forced to put prices up because everyone was coming
• 3:25
  Speaker 2: under massive cost pressure. Now you know, there's still some
• 3:28
  Speaker 2: cost pressures there and businesses are going, you know what,
• 3:31
  Speaker 2: growth may not be and demand may not be as
• 3:33
  Speaker 2: strong as I'd like, but I'm going to go down
• 3:35
  Speaker 2: that path again.
• 3:36
  Speaker 1: How much of this is a productivity discussion in the
• 3:39
  Speaker 1: sense that if hikes come sooner than we think and
• 3:42
  Speaker 1: suddenly we're going, well, hold on, was that it was it?
• 3:45
  Speaker 1: Then that just tells us the story that this economy
• 3:47
  Speaker 1: just doesn't have the wherewith all productivity speaking, to get
• 3:51
  Speaker 1: some grunt going.
• 3:54
  Speaker 2: And certainly that will be a great answer to the
• 3:56
  Speaker 2: question of you know, how we can grow better and
• 3:58
  Speaker 2: faster and that kind of thing without running into some
• 4:01
  Speaker 2: of these sort of speed limits and constraints. Look, you
• 4:05
  Speaker 2: go back ten years, how did we grow the economy
• 4:07
  Speaker 2: through the second half of the last decade. It was
• 4:09
  Speaker 2: through more people. It wasn't through productivity particularly, and so
• 4:13
  Speaker 2: we haven't got the people coming in at the moment.
• 4:15
  Speaker 2: How we're struggling to grow in that regard. So yeah, look, productivity,
• 4:19
  Speaker 2: if we could find the magic cure for that, that
• 4:21
  Speaker 2: would be fantastic.
• 4:22
  Speaker 1: Good talk to you, have a good weekend. Make Kareth
• 4:24
  Speaker 1: keenan infa Metric's chief forecaster, and that in a way,
• 4:26
  Speaker 1: if you believe what he says, is why the election
• 4:29
  Speaker 1: date is November seven and not in September.
• 4:32
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• 4:38
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