Latest / Early Edition with Ryan Bridge / Satish Ranchhod: Westpac Senior Economist on New Zealand's economic growth rate

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Satish Ranchhod: Westpac Senior Economist on New Zealand's economic growth rate · Early Edition with Ryan Bridge

• 0:00
  Speaker 1: We're about to overtake the Aussies on GDP. That's the forecast.
• 0:03
  Speaker 1: GDP growth here should hit two point four percent by
• 0:06
  Speaker 1: the end of this year, the Aussies two percent twenty
• 0:08
  Speaker 1: twenty six, US three point one percent, the Aussies two percent.
• 0:14
  Speaker 1: But the Reserve Bank roller coaster we've been on with
• 0:17
  Speaker 1: the induced recession means that we're left with more spare
• 0:20
  Speaker 1: capacity in our economy. Statist Ranchard is Westpac with west
• 0:24
  Speaker 1: Pac and has been comparing us with the Aussies and
• 0:26
  Speaker 1: joins me this morning. Statistic, good morning, Good morning, Ryan.
• 0:29
  Speaker 1: So we're going to be growing faster but still have
• 0:31
  Speaker 1: higher unemployment for a while longer.
• 0:33
  Speaker 2: Why is that exactly? We've had a deeper recession, as
• 0:38
  Speaker 2: you say, because we had tighter policy in the past
• 0:40
  Speaker 2: few years. It meant that we came to the last
• 0:43
  Speaker 2: downturn in a softer position in the Australians. And now
• 0:47
  Speaker 2: while we're going to be growing, we've still got that
• 0:49
  Speaker 2: lingering softness in the labor market. Means that it's still
• 0:53
  Speaker 2: going to be tough for a lot of us in
• 0:54
  Speaker 2: the next few years.
• 0:55
  Speaker 1: So it doesn't matter how how much we how good
• 0:58
  Speaker 1: we get in the coming year is we're still kind
• 1:01
  Speaker 1: of bulged down by our past.
• 1:05
  Speaker 2: We are getting better, but we do have to deal
• 1:07
  Speaker 2: with the fact that we're coming from a soft position,
• 1:10
  Speaker 2: and it's been pretty tough on a lot of fronts.
• 1:12
  Speaker 2: We did have quite strong inflation the last few years,
• 1:15
  Speaker 2: stronger than the Australians, even with higher interest rates, So
• 1:18
  Speaker 2: the downtown that we had was necessary to get some
• 1:21
  Speaker 2: of those cost of living pressures back for more manageable positions.
• 1:24
  Speaker 1: Our reserve bank, obviously with the OCO, went up like
• 1:27
  Speaker 1: a rocket and then down like a ton of bricks.
• 1:30
  Speaker 1: Which reserve bank, if you had to pick one, performed
• 1:33
  Speaker 1: better over that period.
• 1:36
  Speaker 2: I think these pluses and minuses from both strategy. Even
• 1:39
  Speaker 2: with those larger interest rate increases here we still had
• 1:42
  Speaker 2: some pretty tough inflation, and if we took a more
• 1:44
  Speaker 2: gradual approach we could be still dealing with much stronger
• 1:47
  Speaker 2: cost of living pressures. The more moderate approach in Australia
• 1:50
  Speaker 2: meant that they did have a firmer labor market, but
• 1:53
  Speaker 2: their interest rates are still tight now and even though
• 1:56
  Speaker 2: they're coming down, MW Zealand's got a better growth position.
• 1:59
  Speaker 2: It's a trade off to.
• 2:00
  Speaker 1: Make what's driving their growth. What's driving ours.
• 2:05
  Speaker 2: In New Zealand. What we are seeing are those improvements
• 2:08
  Speaker 2: in commodity export incomes. You're just seeing how we're seeing
• 2:10
  Speaker 2: better employment prospects in areas like christ Church in parts
• 2:14
  Speaker 2: of the South Island, and those lower interest rates here
• 2:17
  Speaker 2: they are going to be boosting growth, but it's taking
• 2:19
  Speaker 2: a while to come through across the ditch. They're still
• 2:22
  Speaker 2: seeing some firmness in the demand story, but some of
• 2:25
  Speaker 2: the big drivers from the past that are easing off,
• 2:27
  Speaker 2: especially their fiscal policy which drive a lot of activity recently.
• 2:31
  Speaker 1: So tease, appreciate your time this morning, great analysis as
• 2:33
  Speaker 1: always to Teach Ranchard, Westpac New Zealand senior economists. For
• 2:37
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• 2:40
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• 2:44
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