Latest / Early Edition with Ryan Bridge / Cameron Bagrie: Economist expects the economy to improve with GDP expected to rise in Q2

Transcript

Cameron Bagrie: Economist expects the economy to improve with GDP expected to rise in Q2 · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: More on that soon. Later today, we'll find out the
• 0:02
  Speaker 1: impact of the Middle East war had on our economy.
• 0:03
  Speaker 1: This is June quarter GDP, Q2 GDP number out today.
• 0:07
  Speaker 1: Most people reckon it's going to come in around 0.2,
• 0:10
  Speaker 1: which in the context is pretty solid. Cameron Bagri, independent
• 0:13
  Speaker 1: economist with us this morning. Cameron, good morning.
• 0:15
  Speaker 2: Good morning.
• 0:16
  Speaker 1: You reckon 0.2?
• 0:18
  Speaker 2: Yeah, there or thereabouts. If you put the year on
• 0:20
  Speaker 2: year number, it's going to look a little bit better. 2%.
• 0:24
  Speaker 2: The economy wasn't improving, getting back on track. So to speak,
• 0:29
  Speaker 2: we just took a bit of a detour in the
• 0:30
  Speaker 2: June quarter on the bumpy old goat track because fuel
• 0:32
  Speaker 2: prices got a lot more expensive. Fuel prices more expensive.
• 0:35
  Speaker 2: It leaves more money in the pocket for people to spend.
• 0:37
  Speaker 2: So the loss of the retail sector has taken a hit.
• 0:41
  Speaker 2: The good news is if we look at all the
• 0:42
  Speaker 2: indicators for Q3, if you get about three-month-old story, Q3
• 0:47
  Speaker 2: is suggesting a number up around 0.8%, 0.9%. Great. Great.
• 0:53
  Speaker 1: What about all the oil, the situation that's going on
• 0:55
  Speaker 1: in the Middle East, continues to go on in the
• 0:57
  Speaker 1: Middle East? What does that mean for the potential for
• 1:00
  Speaker 1: a pre-election rate hike, do you reckon? Because you sort
• 1:03
  Speaker 1: of felt like they would pause pre-election and then go
• 1:06
  Speaker 1: after that. Do you think that this has changed any
• 1:08
  Speaker 1: of that?
• 1:10
  Speaker 2: Well, market sentiment has moved in the past few weeks.
• 1:15
  Speaker 2: And there's a couple of drivers. Number one is oil
• 1:18
  Speaker 2: prices have gone back up. Number two is that The
• 1:23
  Speaker 2: markets are starting to push an awful lot more for
• 1:26
  Speaker 2: central banks as a theme globally to be lifting rates.
• 1:29
  Speaker 2: So it looks like the US Federal Reserve is going
• 1:32
  Speaker 2: to be lifting interest rates. Australia, the market has locked
• 1:36
  Speaker 2: in a lot more on Australia needing to lift interest
• 1:38
  Speaker 2: rates again. Because if you step back, no central bank
• 1:42
  Speaker 2: or few central banks around the globe have managed to
• 1:45
  Speaker 2: return inflation to 2%. And we've actually been a long
• 1:48
  Speaker 2: way away from 2%, not just for a year or
• 1:50
  Speaker 2: two years, but we've been a way away from 2%
• 1:52
  Speaker 2: for about five to six years. So markets are starting
• 1:56
  Speaker 2: to flex their muscle via higher what's called long interest rates.
• 2:01
  Speaker 2: And when longer interest rates move up because inflation expectations
• 2:05
  Speaker 2: are becoming more concerning, it's actually a disciplinarian. So to
• 2:10
  Speaker 2: central banks... sort the inflation story out. How do they
• 2:13
  Speaker 2: sort the inflation story out? Well, they lift interest rates. Unfortunately,
• 2:16
  Speaker 2: that doesn't tend to be too great for growth.
• 2:18
  Speaker 1: Although we are getting pretty healthy growth, and by the
• 2:21
  Speaker 1: sounds of your predictions, even better growth for Q3. Hey,
• 2:25
  Speaker 1: very quickly, do you have a hot take on the
• 2:29
  Speaker 1: report yesterday in the supermarkets?
• 2:33
  Speaker 2: Well, something needed to be done. The OECD put structural
• 2:38
  Speaker 2: separation on the table with it. I think their 2024
• 2:42
  Speaker 2: economic survey, we made an entire chapter across competition. If
• 2:47
  Speaker 2: I look at competition policy, we've got two crises. One
• 2:52
  Speaker 2: crisis is noted as the cost of living, and that's
• 2:55
  Speaker 2: the one that everybody bangs on about. There's actually a
• 2:58
  Speaker 2: second crisis that people don't talk about. And the second
• 3:01
  Speaker 2: crisis is incomes. And incomes are too low. And incomes
• 3:05
  Speaker 2: are too low. Why? Because we've got an awful productivity story. Now,
• 3:08
  Speaker 2: if you think about competition policy, competition policy drives down costs.
• 3:14
  Speaker 2: It makes firms more efficient. It makes them drive harder.
• 3:17
  Speaker 2: It makes them be a lot more innovative. So competition
• 3:20
  Speaker 2: policy has got a really important role. more broadly, to
• 3:24
  Speaker 2: be an enabler in regard to fixing both the crises
• 3:27
  Speaker 2: that we have. We talk about one, we do not
• 3:29
  Speaker 2: talk about the other.
• 3:31
  Speaker 1: Interesting. Cameron, thank you. Cameron Bagri, Independent Economist.