Latest / Best of Business / Paul Bloxham: HSBC chief economist on the OECD reducing its global economic outlook amid escalating trade tariffs

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Paul Bloxham: HSBC chief economist on the OECD reducing its global economic outlook amid escalating trade tariffs · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from News Talk zed B.
• 0:12
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• 0:17
  Speaker 1: Ryan Bridge.
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  Speaker 2: The OCD has revised down its expectations for the global economy.
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  Speaker 2: This is thanks to Trump's tariff trade three t's get
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  Speaker 2: it out, Ryan, Trump's trade tariffs Canada and Mexico are
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  Speaker 2: forecast to see the biggest impact Canada's growth that outlook
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  Speaker 2: has been halved. Mexico is expected to plunge into a recession.
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  Speaker 2: The US is also expected to take a hit. Paul
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  Speaker 2: Bloxham is HSBC's chief economisties with US now Hi Paul
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  Speaker 2: good eight. So what do you make of this OECD
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  Speaker 2: analysis as a stack up.
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  Speaker 3: Well, the idea that it's downside risk for global growth
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  Speaker 3: lifting trade tariffs and the trade tensions that are out
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  Speaker 3: there is certainly makes sense. And the way they've calibrated
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  Speaker 3: that in terms of their forecasts is to lower their
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  Speaker 3: forecast the most for countries that have seen the biggest change,
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  Speaker 3: so Canada Mexico. These are two countries where there have
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  Speaker 3: already been tariffs announced and there are more in train,
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  Speaker 3: So it makes sense that they've revised down their global
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  Speaker 3: growth story. On the back of the policy changes we've seen.
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  Speaker 2: We could see further revision down right, because I mean
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  Speaker 2: we haven't even got to April second yet, which is
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  Speaker 2: when the President will will formally sort of announce what
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  Speaker 2: he's doing with all tariffs.
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  Speaker 3: Well, that's right, we're only part way through the process.
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  Speaker 3: We've seen a whole lot of action already most but
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  Speaker 3: there is still more to come, as you say, So
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  Speaker 3: they're flagging, the administration has been flagging that on the
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  Speaker 3: first of April, there'll be more a larger collection of
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  Speaker 3: possible changes to trade policy from the US. And in
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  Speaker 3: that basket of things that they're talking about, they're talking
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  Speaker 3: about the idea of potentially using what are called reciprocal tariffs.
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  Speaker 3: So the idea is that you look at how every
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  Speaker 3: other country's got its trade policy set with the US,
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  Speaker 3: and then potentially the US matches that. So that would
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  Speaker 3: be a large set of changes that would potentially come
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  Speaker 3: into play. But there are other things in the works
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  Speaker 3: as well, it certainly, and so watching out for what
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  Speaker 3: happens on the first and second of April is certainly important.
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  Speaker 2: Australias also speak to take ahead on these OECD numbers
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  Speaker 2: by how.
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  Speaker 3: Much, not very much for twenty twenty five, although they
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  Speaker 3: have revised down their growth willcast for twenty six. I mean,
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  Speaker 3: I think Australia is less in the firing line in
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  Speaker 3: the scheme of things, because I think most of Australia's
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  Speaker 3: will Australia's trade share with the US is actually not
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  Speaker 3: that large, so only four point six percent of Australia's
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  Speaker 3: exports go to the US directly. But the bigger effect
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  Speaker 3: on Australia is potentially going to come through the impact
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  Speaker 3: that any of these sorts of policy changes has on
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  Speaker 3: Australia's trading partners, mostly in Asia, and of course what
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  Speaker 3: that means for growth in China and the Asian economies
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  Speaker 3: more generally, and they are obviously becoming subject to some
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  Speaker 3: of these policy these policy shifts. The thing I think
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  Speaker 3: that's worth keeping in mind, though, as we saw yesterday
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  Speaker 3: and over the weekend, is that the Chinese policymakers are
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  Speaker 3: also very well aware of this, and they've already started
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  Speaker 3: to take action to support China's growth in the face
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  Speaker 3: of right the ratcheting up trade policy tensions. They've announced
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  Speaker 3: this thirty point plan to support the consumer, and as
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  Speaker 3: a result of that, I think that's going to provide
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  Speaker 3: support for China's growth, So that would be a positive
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  Speaker 3: or an offsetting effect for Australia and for New Zealand
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  Speaker 3: as well.
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  Speaker 2: Yeah, I was going to ask you about China because
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  Speaker 2: you've obviously we had those numbers out for January February
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  Speaker 2: showing their exports were well, not as much as they
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  Speaker 2: would have liked. Their imports were down I think eight
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  Speaker 2: percent for that month. But then, as you say you've
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  Speaker 2: got the stimulus, you've also got the retail sales data
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  Speaker 2: out which was slightly better than expected. How's China looking
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  Speaker 2: to you?
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  Speaker 3: Well, so the broad sweep of numbers we got yesterday
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  Speaker 3: were a bit better on average than was expected. So
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  Speaker 3: across the production numbers, the retail figures, the investment numbers,
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  Speaker 3: they were all a bit better than expected. But the
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  Speaker 3: main thing is we've also seen stronger policy support announced
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  Speaker 3: in this form of this Special Action Plan to boost
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  Speaker 3: Consumption as the Chinese referred to it. And it's a
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  Speaker 3: big plan with a lot of different measures mainly aimed
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  Speaker 3: at trying to lift household incomes. And as a result
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  Speaker 3: of that, HSBC has actually we've revised up our growth
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  Speaker 3: forecast for China for twenty twenty five, we now think
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  Speaker 3: growth will be four point eight percent. We've previously thought
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  Speaker 3: it would be four and a half. So we're taking
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  Speaker 3: action with our own forecasts on the back of the
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  Speaker 3: fact that the policymakers are stepping up and providing more
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  Speaker 3: more stimulus. And that's what's important. I think that's the
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  Speaker 3: fundamental thing that's important for Australia and New Zealand. We
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  Speaker 3: are more tied to the Asia story and the China
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  Speaker 3: story than we are to what happens directly out out
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  Speaker 3: of the US, and so if there are policy measures
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  Speaker 3: like this delivered, which is what we're getting, that's going
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  Speaker 3: to be positive a support for Australia and New Zealand's
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  Speaker 3: trade with China. So that's a big offsetting feature.
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  Speaker 2: Yeah, thank you to the CCP. Now the New Zealand
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  Speaker 2: GDP figure this is four quarter to four last year's
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  Speaker 2: now this Thursday. Most people saying will recover.
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  Speaker 3: Yep, we've got that in mind as well. We've got
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  Speaker 3: a consensus. Actually we're in line with consensus with a
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  Speaker 3: point four percentage point a percent rise in in the
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  Speaker 3: quarter Q on Q. Now the year on a year
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  Speaker 3: number would still be falling quite strongly on the back
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  Speaker 3: of that. But I do think that you're in the beginnings,
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  Speaker 3: and we talked about this when we spoke last time.
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  Speaker 3: We're in the beginnings of an upswing in New Zealand,
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  Speaker 3: and I think there are two key tailwinds that are
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  Speaker 3: really going to help you out. The first one is
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  Speaker 3: that interest rates are coming down, and they've come down
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  Speaker 3: a lot already and they'll probably come down further yet.
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  Speaker 3: So you've given there's been one hundred and seventy five
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  Speaker 3: basis points of easing already and we think there's probably
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  Speaker 3: three more cuts to come. So that's a lot of
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  Speaker 3: monetary policy easing to support the domestic economy. And the
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  Speaker 3: other tailwind is that dairy prices and meat prices are
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  Speaker 3: high and that's giving you a tailwind from the terms
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  Speaker 3: of trade, boosting national income. So that combination we think
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  Speaker 3: will lift growth more this year. And the Q four
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  Speaker 3: print which we get this week is the beginnings of
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  Speaker 3: that upswing led by the consumer. That's what we're expecting.
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  Speaker 2: Long mate continued, Paul, Thank you very much for that,
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  Speaker 2: Paul Bloxham, HSBC Chief Economists.
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