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Speaker 1: Right. It's hoped we'll get confirmation today that New Zealand

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Speaker 1: is crawling out of its recession. The GDP number for

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Speaker 1: Q four last year is out this morning. Most economists

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Speaker 1: are picking a rise between point three and point five percent,

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Speaker 1: but that comes off the back of a one point

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Speaker 1: one percent and one percent drop in Q three in

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Speaker 1: Q two last year. ASB chief economist Nick Toughly is

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Speaker 1: with us now, Good morning, Nick, Thanks for your time.

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Speaker 2: Good morning.

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Speaker 1: What numbers are you picking?

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Speaker 2: We are picking one point three percent lift and that's

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Speaker 2: the same as the Reserve Bank, So I think you

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Speaker 2: had a good analogy there. It is crawling, particularly when

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Speaker 2: you put in that context of just how much things

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Speaker 2: slowed down during the little parts of last year.

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Speaker 1: So the fact that we're going to be out of

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Speaker 1: a technical recession, that's good news. But this growth is

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Speaker 1: still pretty anemic, right.

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Speaker 2: It is going to be a greater recovery. I think

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Speaker 2: what we need to remember is that interest rates have

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Speaker 2: been falling for a little bit, but it hasn't been

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Speaker 2: until probably that fourth quarter of last year where we

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Speaker 2: started to see that average mortgage rate that people were

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Speaker 2: paying start to decline and start to actually impact on

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Speaker 2: people's cash flows, so we do see that we'll be

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Speaker 2: seeing those glimmers of light and consumer spending coming through,

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Speaker 2: which is a really really good start signaling recovery. But

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Speaker 2: we are really being saved over the quarter, assuming that

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Speaker 2: we do have a positive number by things like agriculture,

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Speaker 2: where we had really great weather in the dairy season

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Speaker 2: in particular, had a really strong lift into Christmas.

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Speaker 1: Yes, so as you're taking a look at the sectors

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Speaker 1: which are on the improve, which ones do you think

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Speaker 1: we'll have given it a boost and which ones would

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Speaker 1: you sort of hope to see better performance from going forward.

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Speaker 2: Where we've seen some good time sort of coming through

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Speaker 2: it is a dairy in the meat sector, so strong

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Speaker 2: sort of meat production as well, and despite what's happening

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Speaker 2: in the US for the time being anyway, they haven't

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Speaker 2: given up even handburgers, which has really helped a lot,

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Speaker 2: So that's been good that retail sector through spending, also

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Speaker 2: being helped by tourism. So expect those aspects to come

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Speaker 2: through and help us out. Where I think there still

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Speaker 2: looking quite soggy is in construction, so we're still coming

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Speaker 2: out of the tail end of the impacts of the

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Speaker 2: housing market and more general properties slow down, so that

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Speaker 2: sector really struggling still in the short term.

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Speaker 1: You mentioned the glimmers. We all like a glimmer. How

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Speaker 1: long do you think it will take the country to

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Speaker 1: bounce back from the major drops last year. Are we

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Speaker 1: going to see a boom or much more of a

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Speaker 1: slow burn?

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Speaker 2: It's I think much more realistically look at this as

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Speaker 2: being a slow burn. It's going to be I think

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Speaker 2: a bit of a challenge to suddenly see the economy

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Speaker 2: rebound and recover two percent and the conditions that we're facing.

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Speaker 2: But look where we've got some good tail winds. It

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Speaker 2: is those low interest rates gradually working their way through

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Speaker 2: this year, the good payouts that the farmers are getting,

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Speaker 2: the tourism sector picking up or working their way through.

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Speaker 2: And it's not obviously just about a dairy story. That

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Speaker 2: meets story as well starting to shine through. So look

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Speaker 2: at it as gradual recovery rather than sharp rebound. We're

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Speaker 2: going back to more normal interest rates settings rather than

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Speaker 2: dropping to some really low level where we all can't

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Speaker 2: afford not to borrow.

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Speaker 1: Is z point three percent rise enough of the government

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Speaker 1: to convince us things are turning around.

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Speaker 2: Look, it's a really good sign if we get a

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Speaker 2: positive number that we are starting to crawl our way

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Speaker 2: out of what's been a really challenging time. But look,

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Speaker 2: the challenges is that with growth being relatively modest, we're

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Speaker 2: not going to be suddenly getting back to low levels

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Speaker 2: of unemployment that quickly as well. And look, the general

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Speaker 2: challenges that the government faces are still around getting productivity

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Speaker 2: back up after a number of years of it been very,

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Speaker 2: very weak, and really focusing on what it can do

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Speaker 2: to enable growth, bring back the confidence, get people making

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Speaker 2: decisions that help the economy spack up.

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Speaker 1: I was going to ask you what the risks are

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Speaker 1: for the economy to continue to grow.

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Speaker 2: Where we are most vulnerable and most countries are at

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Speaker 2: the moment is what's happening globally at the moment, mainly

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Speaker 2: around Donald Trump. And there's a few areas where that's

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Speaker 2: impacting just simply all the going backward and forth on

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Speaker 2: whether there's a tariff or not. The fact that he

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Speaker 2: is also hitting a lot of his allies with tariffs

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Speaker 2: is creating a lot of uncertainty, and certainty is not

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Speaker 2: great for making clear decisions. So there is that risk

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Speaker 2: to global growth of it being slowed by both the uncertainty,

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Speaker 2: and that's even before you get into the drag that

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Speaker 2: we could have if we get some quite widespread tariffs.

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Speaker 2: And we are also going to have to be mindful

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Speaker 2: when we roll around it to April and we get

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Speaker 2: our report card on our trade practices, whether or not

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Speaker 2: we get directly impacted by tariffs as well. So biggest

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Speaker 2: risks seem to be coming from globally, whereas domestically, with

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Speaker 2: interest rates coming down, it's really a matter of time

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Speaker 2: until they start to work through and improve the economies locally.

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