1 00:00:00,040 --> 00:00:02,840 Speaker 1: So now there is increasing confidence the next year really 2 00:00:02,880 --> 00:00:04,880 Speaker 1: will be better economically. I know we've been saying this 3 00:00:04,920 --> 00:00:07,159 Speaker 1: for ages, but it's going to be next year. Asb's 4 00:00:07,200 --> 00:00:10,480 Speaker 1: latest quarterly economic forecast is out there, calling clear signs 5 00:00:10,480 --> 00:00:14,200 Speaker 1: of recovery in twenty six consumers spending up big ticket purchases, 6 00:00:14,240 --> 00:00:17,560 Speaker 1: returning interest rates easing off. Nick Tuffley is asb's chief 7 00:00:17,600 --> 00:00:18,239 Speaker 1: economist and. 8 00:00:18,160 --> 00:00:20,080 Speaker 2: With us Morning, Nick, Good morning. 9 00:00:20,120 --> 00:00:22,040 Speaker 1: OK, give it to me. Out of one hundred hour 10 00:00:22,040 --> 00:00:25,479 Speaker 1: confident are you in this, let's. 11 00:00:25,320 --> 00:00:29,120 Speaker 2: Say about about about an eighty. Look, you never say never, 12 00:00:29,200 --> 00:00:32,159 Speaker 2: but the seeds of their recovery look like they are 13 00:00:32,200 --> 00:00:35,080 Speaker 2: starting to really come through, and we know there are 14 00:00:35,120 --> 00:00:36,879 Speaker 2: a few things that will give a bit more momentum 15 00:00:36,920 --> 00:00:37,720 Speaker 2: next year as well. 16 00:00:37,920 --> 00:00:39,560 Speaker 1: So what are you picking two and a half next year? 17 00:00:40,360 --> 00:00:43,000 Speaker 2: You know we've got gross picking up and heading over 18 00:00:43,080 --> 00:00:45,680 Speaker 2: two and a half percent for a period. And let's 19 00:00:45,680 --> 00:00:47,600 Speaker 2: face it that after the last three years of the 20 00:00:47,640 --> 00:00:51,760 Speaker 2: economy literally going nowhere, we've got a lot of spare capacity. 21 00:00:51,840 --> 00:00:54,840 Speaker 2: We do need the economy to actually grow faster than 22 00:00:54,880 --> 00:00:57,280 Speaker 2: what we call it it's sort of usual speed limit 23 00:00:57,320 --> 00:00:58,960 Speaker 2: of somewhere around about two percent. 24 00:01:00,120 --> 00:01:02,160 Speaker 1: Do you I mean, saying it's going to be two 25 00:01:02,160 --> 00:01:03,920 Speaker 1: percent two and a half percent is one thing, But 26 00:01:04,240 --> 00:01:06,280 Speaker 1: are we actually going to feel it or is it 27 00:01:06,280 --> 00:01:07,520 Speaker 1: going to be you know, because at the moment we're 28 00:01:07,560 --> 00:01:09,360 Speaker 1: not feeling it in the cities while they're feeling it 29 00:01:09,360 --> 00:01:10,920 Speaker 1: in the regions. Are we all going to feel it? 30 00:01:11,720 --> 00:01:13,560 Speaker 2: I think we'll feel it a lot more evenly. Look 31 00:01:13,600 --> 00:01:16,360 Speaker 2: at it still has been quite patchy even in retail 32 00:01:16,400 --> 00:01:18,840 Speaker 2: spending where we've seen some really strong growth. It's been 33 00:01:18,880 --> 00:01:21,440 Speaker 2: in some of the big ticket, big ticket items. But 34 00:01:21,520 --> 00:01:24,920 Speaker 2: we are starting to see a turnaround in the construction sector, 35 00:01:25,240 --> 00:01:28,600 Speaker 2: particularly the residential It is turned the corner after falling 36 00:01:28,680 --> 00:01:31,039 Speaker 2: quite a bit. And look, there is a lot more 37 00:01:31,080 --> 00:01:34,080 Speaker 2: cash that we will see more visibly coming through. So 38 00:01:34,120 --> 00:01:37,080 Speaker 2: we still have you know, a bit under half of 39 00:01:37,120 --> 00:01:40,000 Speaker 2: people on a mortgage and effect waiting to benefit from 40 00:01:40,000 --> 00:01:42,160 Speaker 2: the really low rates. And there is a lot of 41 00:01:42,200 --> 00:01:45,479 Speaker 2: cash that people have been earning in the dairy, red meat, 42 00:01:45,680 --> 00:01:48,280 Speaker 2: kiwi fruit sectors. There's some examples and we'll see more 43 00:01:48,280 --> 00:01:51,560 Speaker 2: of that flow through to the regions around the country. Ok. 44 00:01:51,560 --> 00:01:53,520 Speaker 1: At that half who are yet to refix on the 45 00:01:53,560 --> 00:01:56,480 Speaker 1: lower rates, when do they like when is this happening 46 00:01:56,560 --> 00:01:56,840 Speaker 1: for them. 47 00:01:57,520 --> 00:02:00,600 Speaker 2: Yeah, it has started to really sort of build up now, 48 00:02:00,720 --> 00:02:03,040 Speaker 2: and we'd expect that by the middle parts of next 49 00:02:03,080 --> 00:02:05,160 Speaker 2: year a lot of a lot of the benefit will 50 00:02:05,160 --> 00:02:08,239 Speaker 2: have started to flow through. It's just because so many 51 00:02:08,240 --> 00:02:10,240 Speaker 2: people are picking a floating rate or a six month 52 00:02:10,320 --> 00:02:13,040 Speaker 2: rate or even a one year rate over the last 53 00:02:13,120 --> 00:02:15,800 Speaker 2: year or so, that's kind of slowed down, ironically, the 54 00:02:15,840 --> 00:02:18,960 Speaker 2: benefit for the economy, but obviously it's given people a 55 00:02:19,040 --> 00:02:20,680 Speaker 2: window to fix it a much lower rate. 56 00:02:20,880 --> 00:02:23,840 Speaker 1: Yeah, HSBC, I had a chat to them on Friday. 57 00:02:24,000 --> 00:02:26,200 Speaker 1: They're picking us round actually the same as you two 58 00:02:26,280 --> 00:02:28,560 Speaker 1: and a half beating Australia at two point one. Would 59 00:02:28,560 --> 00:02:30,680 Speaker 1: you say that's about right. We're going to out before Australia. 60 00:02:32,040 --> 00:02:33,560 Speaker 2: We've got a good chance. And hey, look we've got 61 00:02:33,600 --> 00:02:35,800 Speaker 2: some figures where we're hitting like about two point seven 62 00:02:35,840 --> 00:02:38,480 Speaker 2: percent on an annual average, just to sort of like 63 00:02:39,120 --> 00:02:41,600 Speaker 2: emphasise or a little bit ahead of Australia. But look, 64 00:02:41,639 --> 00:02:43,799 Speaker 2: we're in a bit of an upswing after a pretty 65 00:02:43,800 --> 00:02:46,880 Speaker 2: tough time Australia has they sort of chugged along. But 66 00:02:46,919 --> 00:02:48,919 Speaker 2: the biggest problem at the moment, and I've got interest 67 00:02:48,960 --> 00:02:51,800 Speaker 2: rates at probably a restrictive level. Is the biggest problem 68 00:02:51,880 --> 00:02:54,760 Speaker 2: is that inflation has been creeping up again, and their 69 00:02:54,800 --> 00:02:57,680 Speaker 2: economy did sail on through things a lot better than ours. 70 00:02:57,720 --> 00:02:59,560 Speaker 2: We have to we have to sort of really acknowledge 71 00:02:59,600 --> 00:03:00,200 Speaker 2: that to. 72 00:03:00,160 --> 00:03:01,560 Speaker 1: All Right, Hey, listen, Nick, it's good to talk to you. 73 00:03:01,560 --> 00:03:02,919 Speaker 1: Thank you so much. Enjoy the rest of your morning, 74 00:03:02,960 --> 00:03:05,239 Speaker 1: Nick Tagley, ASP's chief economist. 75 00:03:05,800 --> 00:03:08,680 Speaker 2: For more from the Mic Asking Breakfast, listen live to 76 00:03:08,800 --> 00:03:11,880 Speaker 2: News Talks it' B from six am weekdays, or follow 77 00:03:11,919 --> 00:03:13,480 Speaker 2: the podcast on iHeartRadio.