Latest / Early Edition with Ryan Bridge / Sharon Zollner: ANZ Chief Economist on the economic fallout from the conflict in the Middle East

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Sharon Zollner: ANZ Chief Economist on the economic fallout from the conflict in the Middle East · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: So we all heard the doom and gloom at postcam yesterday.
• 0:02
  Speaker 2: I am advised that a quick resolution of the conflict
• 0:05
  Speaker 2: in the next few weeks would see the economy evolve
• 0:08
  Speaker 2: close to the preliminary forecasts, albeit with slightly higher inflation
• 0:12
  Speaker 2: in the near turn. A longer conflict would likely have
• 0:15
  Speaker 2: downside GDP impacts.
• 0:18
  Speaker 1: By the way, Brient crew this morning has come back
• 0:20
  Speaker 1: from one hundred and twenty dollars of barrels now back
• 0:22
  Speaker 1: under one hundred dollars, still floating around it with but
• 0:25
  Speaker 1: Sharon's Olner, A and Z chief economists with us this morning. Sharon,
• 0:28
  Speaker 1: good morning, good morning. Give it to us straight. How
• 0:31
  Speaker 1: bad is this going to get?
• 0:34
  Speaker 3: Well? Well, having spoken to them major world leaders, that's
• 0:38
  Speaker 3: the thing that we are in no position today. And
• 0:42
  Speaker 3: the Minister is quite right that the duration of the
• 0:45
  Speaker 3: shop is just as important as the size of it.
• 0:48
  Speaker 3: And as regards the size of it, I mean, oil
• 0:49
  Speaker 3: hit one hundred and twenty yesterday, now it's back under
• 0:52
  Speaker 3: one hundred. I mean, these moves are enormous, so very
• 0:56
  Speaker 3: very difficult to gauge the severity of the shop for
• 0:59
  Speaker 3: market at the moment. But yeah, some are shooting first
• 1:03
  Speaker 3: and ask some questions later. In terms of the market,
• 1:05
  Speaker 3: moves have been quite ferocious. But we're seeing not just
• 1:10
  Speaker 3: the oil price but other prices like bond yields coming
• 1:14
  Speaker 3: back a bit as well, which is good because we
• 1:16
  Speaker 3: had a wild day yesterday in the Zealand market.
• 1:18
  Speaker 1: Yeah it was pretty crazy, wasn't it. Do you think
• 1:20
  Speaker 1: Edell might come down a bit more today given what's
• 1:23
  Speaker 1: happening with that oil price?
• 1:25
  Speaker 3: Is it? Typically the New Zealand market reflects what's happened
• 1:28
  Speaker 3: in the US market overnight. So that I've just checked,
• 1:31
  Speaker 3: the US tenure yields have come back a long way,
• 1:33
  Speaker 3: so the New Zealand bond yields should follow hopefully on
• 1:38
  Speaker 3: the open. But we will continue to follow them up
• 1:40
  Speaker 3: and down however the volatility goes. And that's one of
• 1:43
  Speaker 3: the things that is easier to be certain about at
• 1:45
  Speaker 3: the moment, is that solatility is going to continue because
• 1:47
  Speaker 3: market are reacting to headlines that are all over the place, of.
• 1:51
  Speaker 1: Course, and then there's our reaction to those headlines too,
• 1:54
  Speaker 1: both businesses and consumers. And we saw what happened with
• 1:57
  Speaker 1: Trump and his tariffs. You know, we all went, oh,
• 2:00
  Speaker 1: not spend any money. Let's stay home. Whatever. Do you know,
• 2:03
  Speaker 1: is there a risk that happens here? Does the recovery stall?
• 2:07
  Speaker 3: I have absolutely, uncertainty is not great for decision making,
• 2:11
  Speaker 3: That's always the case, and of course we've already got
• 2:13
  Speaker 3: an election this year. We were wondering if that uncertainty
• 2:16
  Speaker 3: could impact and the uncertainty about the global growth outlook
• 2:19
  Speaker 3: will be weighing on the minds of exporters for sure,
• 2:22
  Speaker 3: and cost inflation potentially as Well've obviously got a lot
• 2:26
  Speaker 3: of businesses that are exposed to energy costs. Fertilizer is
• 2:30
  Speaker 3: another one that tends to move pretty closely with oil
• 2:34
  Speaker 3: as well. So yeah, the uncertainty, well, let's hope it's
• 2:38
  Speaker 3: resolved alatively quickly. But right here, right now, it's like
• 2:42
  Speaker 3: it's pretty much at the maximum in terms of whether
• 2:44
  Speaker 3: we're looking at a short or a long term disruption
• 2:47
  Speaker 3: to oil markets here.
• 2:49
  Speaker 1: And yet you sound quite relaxed to me. Is that
• 2:52
  Speaker 1: because is Sharon? Is that because you're doing your best
• 2:55
  Speaker 1: to sound relaxed or do you think do you think
• 2:58
  Speaker 1: there's an equal chance Actually this could up in a
• 3:00
  Speaker 1: week or two and everything's back to normal.
• 3:03
  Speaker 3: It's not looking that way, is it, But it is
• 3:06
  Speaker 3: looking a lot better than it was twelve hours ago
• 3:09
  Speaker 3: in terms of the market prices, but who knows where
• 3:13
  Speaker 3: it to look like twelve hours from now. But I
• 3:15
  Speaker 3: do think that central banks at least will be keen
• 3:19
  Speaker 3: to not panic and not do anything rare in terms
• 3:23
  Speaker 3: of rushing to raise interest rates because it's inflationary for example,
• 3:27
  Speaker 3: because it is also bad for growth, and so the
• 3:30
  Speaker 3: trade off and the choices are quite stark for central
• 3:33
  Speaker 3: banks in terms of how they should respond to it.
• 3:37
  Speaker 3: Our own central bank express confidence and inflation that looks
• 3:40
  Speaker 3: in Febry. I'm sure they're feeling less confident now, just
• 3:43
  Speaker 3: because oil is such an important input into all sorts
• 3:46
  Speaker 3: of costs and prices. But as long as inflation expectations
• 3:50
  Speaker 3: remain well anchored and they can tolerate a bit of
• 3:53
  Speaker 3: noise in the near term, rather than feel they need
• 3:56
  Speaker 3: to deliberately head the recovery off in order to make
• 4:00
  Speaker 3: sure inflations back at two percent quickly. That's not how
• 4:02
  Speaker 3: these things work. But if it's a very long sustained shock,
• 4:06
  Speaker 3: then there will be more difficult to look through those
• 4:09
  Speaker 3: inflationary impacts, and then it could get a bit ugly.
• 4:12
  Speaker 1: Sharon, thank you. Sharon's on the A and Z Chief Economists.
• 4:15
  Speaker 2: For more from Early Edition with Ryan Bridge.
• 4:18
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• 4:21
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