Latest / Early Edition with Ryan Bridge / Kim Mundy: ASB Senior Economist ahead of the release of last quarters GDP figures

Transcript

Kim Mundy: ASB Senior Economist ahead of the release of last quarters GDP figures · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: GDP day. As I mentioned this morning, the print four
• 0:02
  Speaker 1: Q one, What did the economy doing? Jan Fab and March.
• 0:05
  Speaker 1: Are we're still in recession or not? ASBC new economist
• 0:07
  Speaker 1: Kim Mundy is back. Well, it's Keiven, very good morning
• 0:09
  Speaker 1: to you.
• 0:10
  Speaker 2: Good morning.
• 0:11
  Speaker 1: So you're bullish. Bullish at zero point one of zero
• 0:14
  Speaker 1: point one is bullish? What are you? Where did you
• 0:16
  Speaker 1: see the growth?
• 0:18
  Speaker 2: Yeah, I mean, we're not expecting it was another recession
• 0:22
  Speaker 2: in the quarter. That's hardly a strong quarter of growth
• 0:26
  Speaker 2: at just point one, but we do think it was
• 0:29
  Speaker 2: sort of spread over both the primary sector, so that's
• 0:32
  Speaker 2: things like dairy output, forestry, fishing, and then also still
• 0:39
  Speaker 2: the services sector. So the services sector has been a
• 0:42
  Speaker 2: part of the economy that's really been outperforming since post
• 0:46
  Speaker 2: COVID because once those COVID restrictions were lifted, we have
• 0:50
  Speaker 2: spent a lot of our time and a lot of
• 0:52
  Speaker 2: our demand has been driven towards those services rather than
• 0:56
  Speaker 2: the good sort of sector.
• 0:58
  Speaker 1: Okay, so let's say you're correct and we've got just
• 1:00
  Speaker 1: a little bit of growth. What about Q two And
• 1:02
  Speaker 1: I know we're not out of it yet, but we're
• 1:03
  Speaker 1: just about out of it. Does Q two improve on
• 1:06
  Speaker 1: Q one, or if Q one's not that flash, Q
• 1:08
  Speaker 1: two is going to be no better either.
• 1:10
  Speaker 2: Look, we actually think Q two is probably going to
• 1:12
  Speaker 2: be worse again at this stage looking at the data
• 1:14
  Speaker 2: that's come out so far. And I think that's the
• 1:16
  Speaker 2: key thing to keep in mind, is that we are
• 1:19
  Speaker 2: in a period of really really weak private demand. So
• 1:23
  Speaker 2: monetary policy is working, a lot of people are pulling
• 1:26
  Speaker 2: back on their spending that impacts the economy. Data out
• 1:31
  Speaker 2: so far suggests that's just sort of continued to ramp up,
• 1:35
  Speaker 2: so to speak. How the market activity has been pretty soft,
• 1:38
  Speaker 2: so sign so far suggests that Q two could actually
• 1:41
  Speaker 2: see us slipped back into a bit of a decline.
• 1:44
  Speaker 1: So here's my problem ongoing. So what is it that
• 1:47
  Speaker 1: breaks the cycle? So, whether you're right today on Q
• 1:49
  Speaker 1: one and Q two, you say, it's as flat as
• 1:51
  Speaker 1: a pancake, it's ugly as so Adrian comes to the
• 1:54
  Speaker 1: party in what late this year maybe early next year,
• 1:57
  Speaker 1: and goes, there's a cut, Maybe there's another cut. Do
• 1:59
  Speaker 1: we all suddenly wake up and go hellolujah? At that point,
• 2:01
  Speaker 1: are we in for some hard yards for a sustained
• 2:04
  Speaker 1: period of time?
• 2:06
  Speaker 2: We are in for a pretty tough period of time,
• 2:09
  Speaker 2: I think. I mean, there will be a bit of
• 2:11
  Speaker 2: a confidence boost once we do hear from Adrian that Yep,
• 2:15
  Speaker 2: we've done enough, We've got there. We will start to
• 2:17
  Speaker 2: ease monetary policy. But the fact that monetary policy takes
• 2:20
  Speaker 2: time to impact the economy. That works in both directions.
• 2:24
  Speaker 2: So those of those people on sex mortgages, they have
• 2:27
  Speaker 2: to wait till their mortgage rolls off before they feel
• 2:29
  Speaker 2: the impact of those lower interest rates. So it will
• 2:32
  Speaker 2: be quite a long time before the sort of pressure
• 2:36
  Speaker 2: starts to ease out of the out of the economy exactly.
• 2:40
  Speaker 1: Are you into the survive to twenty five thing or
• 2:42
  Speaker 1: is that just buzz talk?
• 2:45
  Speaker 2: No? I think that's I mean, that is very much
• 2:47
  Speaker 2: the case. I mean, we're expecting the OCO will start
• 2:50
  Speaker 2: to be cut in twenty February twenty twenty five. I mean,
• 2:54
  Speaker 2: certain sectors will feel the impact of that sooner than others,
• 2:57
  Speaker 2: or anything sort of touching how they market might get
• 2:59
  Speaker 2: a bit of the boost off the back of that,
• 3:01
  Speaker 2: because it's very interest rate sensitive. But you know, if
• 3:04
  Speaker 2: we can get through to early twenty twenty five to
• 3:08
  Speaker 2: the cup do start to come, then we should start
• 3:10
  Speaker 2: to get you know, a little bit of a reprieve.
• 3:15
  Speaker 2: It will just take time for that to really flow
• 3:18
  Speaker 2: through the entire economy.
• 3:19
  Speaker 1: I appreciate your insight. Can go well, have a good day,
• 3:21
  Speaker 1: Kim Monday, I as we've seen your economics. For more
• 3:24
  Speaker 1: from News Talks B listen live on air or online,
• 3:28
  Speaker 1: and keep our shows with you wherever you go with
• 3:30
  Speaker 1: our podcasts on iHeartRadio