1 00:00:00,360 --> 00:00:01,160 Speaker 1: Crayon Bridge. 2 00:00:01,200 --> 00:00:05,560 Speaker 2: The OCD has revised down its expectations for the global economy. 3 00:00:05,600 --> 00:00:11,959 Speaker 2: This is thanks to Trump's tariff trade three t's get 4 00:00:11,960 --> 00:00:16,520 Speaker 2: it out, Ryan. Trump's trade tariffs. Canada and Mexico are 5 00:00:16,560 --> 00:00:20,200 Speaker 2: forecast to see the biggest impact Canada's growth that outlook 6 00:00:20,239 --> 00:00:23,720 Speaker 2: has been halved, Mexico's expected to plunge into a recession. 7 00:00:23,760 --> 00:00:27,320 Speaker 2: The US is also expected to take a hit. Paul Bloxham, 8 00:00:27,440 --> 00:00:31,320 Speaker 2: is HSBC's chief economisties with US now Hi Paul good eight. 9 00:00:31,920 --> 00:00:34,360 Speaker 2: So what do you make of this OECD analysis as 10 00:00:34,360 --> 00:00:34,919 Speaker 2: a stack up. 11 00:00:36,360 --> 00:00:39,560 Speaker 3: Well, the idea that it's downside risk for global growth 12 00:00:39,600 --> 00:00:42,600 Speaker 3: lifting trade tariffs and the trade tensions that are out 13 00:00:42,600 --> 00:00:46,120 Speaker 3: there is certainly makes sense. And the way they've calibrated 14 00:00:46,159 --> 00:00:49,080 Speaker 3: that in terms of their forecasts is to lower their 15 00:00:49,080 --> 00:00:51,880 Speaker 3: forecast the most for countries that have seen the biggest changes, 16 00:00:51,960 --> 00:00:53,519 Speaker 3: so Canada Mexico. 17 00:00:53,720 --> 00:00:54,440 Speaker 1: These are two. 18 00:00:54,360 --> 00:00:58,040 Speaker 3: Countries where there have already been tariffs announced and there 19 00:00:58,040 --> 00:01:00,680 Speaker 3: are more in train. So it makes dents that they've 20 00:01:00,680 --> 00:01:04,640 Speaker 3: revised down their global growth story on the back of 21 00:01:04,480 --> 00:01:05,920 Speaker 3: the policy changes we've seen. 22 00:01:06,240 --> 00:01:08,760 Speaker 2: We could see further revision down right, because I mean 23 00:01:08,760 --> 00:01:10,800 Speaker 2: we haven't even got to April second yet, which is 24 00:01:10,800 --> 00:01:14,640 Speaker 2: when the President will will formally sort of announce what 25 00:01:14,720 --> 00:01:16,640 Speaker 2: he's doing with all tariffs. 26 00:01:17,480 --> 00:01:19,600 Speaker 3: Well, that's right, we're only part way through the process. 27 00:01:19,680 --> 00:01:23,000 Speaker 3: We've seen a whole lot of action already most but 28 00:01:23,040 --> 00:01:24,960 Speaker 3: there is still more to come, as you say, So 29 00:01:25,280 --> 00:01:27,640 Speaker 3: they're flagging, the administration has been flagging that on the 30 00:01:27,640 --> 00:01:31,039 Speaker 3: first of April there'll be more a larger collection of 31 00:01:31,120 --> 00:01:35,679 Speaker 3: possible changes to trade policy from the US. And in 32 00:01:35,720 --> 00:01:38,320 Speaker 3: that basket of things that they're talking about, they're talking 33 00:01:38,360 --> 00:01:40,280 Speaker 3: about the idea of potentially using. 34 00:01:40,040 --> 00:01:43,160 Speaker 1: What are called reciprocal tariffs. So the idea is that 35 00:01:43,200 --> 00:01:43,880 Speaker 1: you look. 36 00:01:43,760 --> 00:01:47,080 Speaker 3: At how every other country's got its trade policy set 37 00:01:47,120 --> 00:01:49,800 Speaker 3: with the US, and then potentially the US matches that. 38 00:01:50,080 --> 00:01:53,440 Speaker 3: So that would be a large set of changes that 39 00:01:53,480 --> 00:01:57,360 Speaker 3: would potentially come into play. But there are other things 40 00:01:57,400 --> 00:01:59,840 Speaker 3: in the works as well, it certainly, and so watching 41 00:01:59,840 --> 00:02:01,800 Speaker 3: out for what happens on the first and second of 42 00:02:01,840 --> 00:02:03,280 Speaker 3: April is certainly important. 43 00:02:03,800 --> 00:02:06,880 Speaker 2: Australias also speak to take ahead on these OCD numbers 44 00:02:06,880 --> 00:02:07,280 Speaker 2: by how. 45 00:02:07,240 --> 00:02:11,080 Speaker 3: Much not very much for twenty twenty five, although they 46 00:02:11,080 --> 00:02:15,000 Speaker 3: have revised down their growth forecast for twenty six. I 47 00:02:15,000 --> 00:02:19,000 Speaker 3: mean I think Australia is less in the firing line 48 00:02:19,160 --> 00:02:21,600 Speaker 3: in the scheme of things, because I think most of 49 00:02:21,639 --> 00:02:24,840 Speaker 3: Australia's will. Australia's trade share with the US is actually 50 00:02:24,840 --> 00:02:28,000 Speaker 3: not that large, so only four point six percent of 51 00:02:28,040 --> 00:02:31,440 Speaker 3: Australia's exports go to the US directly. But the bigger 52 00:02:31,480 --> 00:02:34,320 Speaker 3: effect on Australia is potentially going to come through the 53 00:02:34,360 --> 00:02:36,919 Speaker 3: impact that any of these sorts of policy changes has 54 00:02:36,960 --> 00:02:40,280 Speaker 3: on Australia's trading partners, mostly in Asia, and of course 55 00:02:40,320 --> 00:02:43,040 Speaker 3: what that means for growth in China and the Asian 56 00:02:43,080 --> 00:02:46,360 Speaker 3: economies more generally, and they are obviously becoming subject to 57 00:02:46,400 --> 00:02:49,840 Speaker 3: some of these policy these policy shifts. The thing I 58 00:02:49,840 --> 00:02:52,680 Speaker 3: think that's worth keeping in mind, though, as we saw 59 00:02:52,919 --> 00:02:56,399 Speaker 3: yesterday and over the weekend, is that the Chinese policymakers 60 00:02:56,440 --> 00:02:58,760 Speaker 3: are also very well aware of this, and they've already 61 00:02:58,760 --> 00:03:02,520 Speaker 3: started to take action to support China's growth in the 62 00:03:02,520 --> 00:03:06,440 Speaker 3: face of right the ratcheting up trade policy tensions. They've 63 00:03:06,440 --> 00:03:10,640 Speaker 3: announced this thirty point plan to support the consumer, and 64 00:03:10,760 --> 00:03:12,400 Speaker 3: as a result of that, I think that's going to 65 00:03:12,400 --> 00:03:15,200 Speaker 3: provide support for China's growth, so that would be a 66 00:03:15,280 --> 00:03:18,720 Speaker 3: positive or an offsetting effect for Australia and for New 67 00:03:18,800 --> 00:03:19,359 Speaker 3: Zealand as well. 68 00:03:19,400 --> 00:03:21,079 Speaker 2: Yeah, I was going to ask you about China because 69 00:03:21,120 --> 00:03:23,760 Speaker 2: you've obviously we had those numbers out for January February 70 00:03:23,800 --> 00:03:27,440 Speaker 2: showing their exports were well, not as much as they 71 00:03:27,520 --> 00:03:30,919 Speaker 2: would have liked. Their imports were down I think eight 72 00:03:30,960 --> 00:03:33,000 Speaker 2: percent for that month. But then, as you say you've 73 00:03:33,040 --> 00:03:36,280 Speaker 2: got the stimulus, you've also got the retail sales data 74 00:03:36,320 --> 00:03:39,960 Speaker 2: out which was slightly better than expected. How's China looking 75 00:03:40,000 --> 00:03:40,320 Speaker 2: to you? 76 00:03:41,400 --> 00:03:43,680 Speaker 3: Well, so the broad sweep of numbers we got yesterday 77 00:03:43,680 --> 00:03:45,960 Speaker 3: were a bit better on average than was expected. So 78 00:03:46,000 --> 00:03:49,280 Speaker 3: across the production numbers, the retail figures, the investment numbers, 79 00:03:49,280 --> 00:03:51,160 Speaker 3: they were all a bit better than expected. But the 80 00:03:51,200 --> 00:03:54,800 Speaker 3: main thing is we've also seen stronger policy support announced 81 00:03:54,880 --> 00:03:58,480 Speaker 3: in this form of this Special Action Plan to boost 82 00:03:58,520 --> 00:04:01,320 Speaker 3: consumption as the Chinese referred to it. And it's a 83 00:04:01,320 --> 00:04:03,640 Speaker 3: big plan with a lot of different measures, mainly aimed 84 00:04:03,680 --> 00:04:06,040 Speaker 3: at trying to lift household incomes. And as a result 85 00:04:06,080 --> 00:04:09,120 Speaker 3: of that, HSBC has actually we've revised up our growth 86 00:04:09,120 --> 00:04:11,920 Speaker 3: forecast for China for twenty twenty five. We now think 87 00:04:11,960 --> 00:04:14,680 Speaker 3: growth will be four point eight percent. We previously thought 88 00:04:14,680 --> 00:04:17,000 Speaker 3: it would be four and a half. So we're taking 89 00:04:17,040 --> 00:04:19,080 Speaker 3: action with our own forecasts on the back of the 90 00:04:19,080 --> 00:04:21,680 Speaker 3: fact that the policymakers are stepping up and providing more 91 00:04:22,000 --> 00:04:24,520 Speaker 3: more stimulus, and that's what's important. I think that's the 92 00:04:24,560 --> 00:04:27,080 Speaker 3: fundamental thing that's important for Australia and New Zealand. 93 00:04:27,160 --> 00:04:28,600 Speaker 1: We are more tied to. 94 00:04:28,720 --> 00:04:31,000 Speaker 3: The Asia story and the China story than we are 95 00:04:31,080 --> 00:04:35,000 Speaker 3: to what happens directly out out of the US, and 96 00:04:35,080 --> 00:04:38,039 Speaker 3: so if there are policy measures like this delivered, which 97 00:04:38,080 --> 00:04:40,440 Speaker 3: is what we're getting, that's going to be positive a 98 00:04:40,480 --> 00:04:42,799 Speaker 3: support for Australia. 99 00:04:42,360 --> 00:04:44,800 Speaker 1: And New Zealand's trade with China. So that's a big 100 00:04:44,839 --> 00:04:45,680 Speaker 1: offsetting feature. 101 00:04:45,839 --> 00:04:49,400 Speaker 2: Yeah, thank you to the CCP. Now the New Zealand 102 00:04:49,480 --> 00:04:51,560 Speaker 2: GDP figure, this is four quarter to four last year, 103 00:04:51,600 --> 00:04:54,479 Speaker 2: is out this Thursday. Most people saying we'll recover. 104 00:04:56,040 --> 00:04:57,640 Speaker 1: Yep, we've got that in mind as well. We've got 105 00:04:57,640 --> 00:04:58,280 Speaker 1: a consensus. 106 00:04:58,279 --> 00:05:00,360 Speaker 3: Actually we're in line with consensus with a point four 107 00:05:00,400 --> 00:05:04,440 Speaker 3: percentage point a percent rise in the quarter Q on Q. Now, 108 00:05:04,440 --> 00:05:06,760 Speaker 3: the year on year number would still be falling quite 109 00:05:06,800 --> 00:05:09,000 Speaker 3: strongly on the back of that, but I do think 110 00:05:09,040 --> 00:05:11,320 Speaker 3: that you're in the beginnings and we talked about this 111 00:05:11,360 --> 00:05:13,560 Speaker 3: when we spoke last time. We're in the beginnings of 112 00:05:13,600 --> 00:05:15,560 Speaker 3: an upswing in New Zealand, and I think there are 113 00:05:15,560 --> 00:05:18,799 Speaker 3: two key tailwinds that are really going to help you out. 114 00:05:19,279 --> 00:05:21,600 Speaker 3: The first one is that interest rates are coming down, 115 00:05:21,760 --> 00:05:23,880 Speaker 3: and they've come down a lot already and they'll probably 116 00:05:23,880 --> 00:05:25,920 Speaker 3: come down further yet. So you've given there's been one 117 00:05:25,960 --> 00:05:28,320 Speaker 3: hundred and seventy five basis points of easing already and 118 00:05:28,360 --> 00:05:30,239 Speaker 3: we think there's probably three more cuts to come. 119 00:05:30,880 --> 00:05:33,159 Speaker 1: So that's a lot of monetary policy easing to support 120 00:05:33,200 --> 00:05:34,200 Speaker 1: the domestic economy. 121 00:05:34,440 --> 00:05:36,839 Speaker 3: And the other tailwind is that dairy prices and meat 122 00:05:36,839 --> 00:05:39,440 Speaker 3: prices are high and that's giving you a tailwind from 123 00:05:39,440 --> 00:05:42,680 Speaker 3: the terms of trade, boosting national income. So that combination 124 00:05:42,920 --> 00:05:45,560 Speaker 3: we think will lift growth more this year. 125 00:05:45,600 --> 00:05:46,880 Speaker 1: And the Q four. 126 00:05:46,720 --> 00:05:49,280 Speaker 3: Print which we get this week is the beginnings of 127 00:05:49,320 --> 00:05:51,400 Speaker 3: that upswing led by the consumer. 128 00:05:51,800 --> 00:05:52,760 Speaker 1: That's what we're expecting. 129 00:05:52,839 --> 00:05:54,719 Speaker 2: Long mate, continue, Paul, Thank you very much for that. 130 00:05:54,760 --> 00:05:57,000 Speaker 2: Paul Bloxham, HSBC Chief Economists. 131 00:05:57,520 --> 00:06:00,640 Speaker 3: For more from Hither Duplessy Allen Drive and Live to 132 00:06:00,760 --> 00:06:03,799 Speaker 3: News Talks, it'd be from four pm weekdays, or follow 133 00:06:03,839 --> 00:06:05,560 Speaker 3: the podcast on iHeartRadio.