1 00:00:04,920 --> 00:00:05,320 Speaker 1: Hilda. 2 00:00:05,400 --> 00:00:08,600 Speaker 2: I'm Chelsea Daniels and This is the Front Page, a 3 00:00:08,680 --> 00:00:16,640 Speaker 2: daily podcast presented by the New Zealand Herald. The Reserve 4 00:00:16,760 --> 00:00:20,520 Speaker 2: Bank has cut the official cash rate twenty five basis 5 00:00:20,560 --> 00:00:23,240 Speaker 2: points to three point twenty five percent. 6 00:00:23,800 --> 00:00:25,560 Speaker 1: That's the lowest it's been. 7 00:00:25,400 --> 00:00:30,120 Speaker 2: Since August twenty twenty two, though there were discussions about 8 00:00:30,200 --> 00:00:34,040 Speaker 2: holding it. Today's move is in line with most economists' 9 00:00:34,120 --> 00:00:37,640 Speaker 2: expectations and is another positive sign of the growth of 10 00:00:37,680 --> 00:00:42,720 Speaker 2: the economy, but there remains global uncertainty over US President 11 00:00:42,800 --> 00:00:46,960 Speaker 2: Donald Trump's policies and what impact his tariffs. 12 00:00:46,360 --> 00:00:48,120 Speaker 1: And trade wars could have. 13 00:00:48,400 --> 00:00:52,519 Speaker 2: Today on the Front Page, Infometrics chief forecaster Gareth Kinnan 14 00:00:52,600 --> 00:00:55,320 Speaker 2: is with us to dissect the decision to cut again 15 00:00:55,440 --> 00:01:06,000 Speaker 2: and what impact global politics could have on our economy. Gareth, 16 00:01:06,080 --> 00:01:08,759 Speaker 2: the OCEA has been cut again. 17 00:01:09,200 --> 00:01:10,039 Speaker 1: Is that good news? 18 00:01:10,400 --> 00:01:14,319 Speaker 3: It is good news for borrowers and mortgage holders expecting 19 00:01:14,360 --> 00:01:17,440 Speaker 3: to see the floating rates come down, and signals from 20 00:01:17,440 --> 00:01:20,199 Speaker 3: the Reserve Bank also suggesting that, if anything, there's still 21 00:01:20,240 --> 00:01:24,039 Speaker 3: more downside risks to interest rates than they previously allowed for, 22 00:01:24,200 --> 00:01:26,160 Speaker 3: so that could well see a bit more prescire coming 23 00:01:26,200 --> 00:01:27,920 Speaker 3: through in terms of fixed rates. 24 00:01:27,959 --> 00:01:29,160 Speaker 4: Going down as well. 25 00:01:29,120 --> 00:01:32,679 Speaker 2: Market pricing, and I guess nearly all the economists had 26 00:01:32,680 --> 00:01:35,920 Speaker 2: a twenty five basis point cut locked in, and that's 27 00:01:35,959 --> 00:01:38,720 Speaker 2: exactly what happened. What does it mean for our economy? 28 00:01:39,000 --> 00:01:41,279 Speaker 3: I'm the Reserve Bank at the moment is effectively pushing 29 00:01:41,319 --> 00:01:43,759 Speaker 3: against a whole lot of uncertainty that we're getting coming 30 00:01:43,800 --> 00:01:47,960 Speaker 3: in from overseas with the international trade war and nobody 31 00:01:48,000 --> 00:01:50,400 Speaker 3: quite knowing how that's going to pan out. The Reserve 32 00:01:50,440 --> 00:01:53,880 Speaker 3: Bank themselves expressing a lot of uncertainty about what's going forward, 33 00:01:53,920 --> 00:01:56,520 Speaker 3: so they're I guess trying to provide as much support 34 00:01:56,560 --> 00:01:57,640 Speaker 3: for the economy. 35 00:01:57,240 --> 00:01:57,920 Speaker 4: As they can. 36 00:01:58,280 --> 00:02:00,280 Speaker 3: You know, New Zealand was in the early state pages 37 00:02:00,280 --> 00:02:03,040 Speaker 3: of an economic recovery after the sort of very tough 38 00:02:03,080 --> 00:02:05,760 Speaker 3: conditions through twenty twenty three and twenty twenty four. This 39 00:02:06,040 --> 00:02:08,560 Speaker 3: international trade will was come at a really bad time 40 00:02:08,600 --> 00:02:10,560 Speaker 3: in terms of sort of kneecapping that recovery. 41 00:02:10,600 --> 00:02:12,400 Speaker 4: So the Bank is trying to help there, but. 42 00:02:12,360 --> 00:02:16,240 Speaker 3: They have also recognized that position and downgraded their economic 43 00:02:16,360 --> 00:02:18,920 Speaker 3: forecasts as well, so it is kind of just just 44 00:02:18,960 --> 00:02:21,200 Speaker 3: trying to help the economy keep going, but you know, 45 00:02:21,320 --> 00:02:23,160 Speaker 3: not adding too much fuel to that fire. 46 00:02:23,400 --> 00:02:26,440 Speaker 2: A and Z has forecast that had eventually dropped down 47 00:02:26,480 --> 00:02:29,760 Speaker 2: to two point five percent. Others are slightly more optimistic, 48 00:02:29,800 --> 00:02:33,400 Speaker 2: suggesting an endpoint at two point seventy five. This is 49 00:02:33,440 --> 00:02:36,640 Speaker 2: the sixth cut in a row. How low will it 50 00:02:36,760 --> 00:02:38,080 Speaker 2: go before it holds? 51 00:02:38,120 --> 00:02:39,360 Speaker 1: Do you think, Yeah. 52 00:02:39,160 --> 00:02:41,680 Speaker 3: We've got another interest rate cut factored in at the 53 00:02:41,720 --> 00:02:44,920 Speaker 3: next review in July is taking it down to three percent. 54 00:02:45,040 --> 00:02:47,480 Speaker 3: At this stage, we're still unsure about whether there will 55 00:02:47,480 --> 00:02:50,079 Speaker 3: be further cuts after that. We haven't formally built any 56 00:02:50,120 --> 00:02:53,200 Speaker 3: into our forecast, but recognizing that what is going on 57 00:02:53,320 --> 00:02:56,280 Speaker 3: internationally does create some downside risks. 58 00:02:56,560 --> 00:02:57,880 Speaker 4: The problem for the Reserve. 59 00:02:57,600 --> 00:02:59,600 Speaker 3: Bank at the moment is that they are also looking 60 00:02:59,639 --> 00:03:02,760 Speaker 3: though just a little bit of inflationary pressure coming through 61 00:03:02,800 --> 00:03:05,560 Speaker 3: the system. Inflation sort of picked up in the latest quarter. 62 00:03:05,800 --> 00:03:09,960 Speaker 3: Inflation expectations have lifted as well. Reserve bankers said that 63 00:03:09,960 --> 00:03:13,440 Speaker 3: that will be temporary, but they also do have in 64 00:03:13,480 --> 00:03:15,600 Speaker 3: their minds what happened three or four years ago where 65 00:03:15,600 --> 00:03:18,160 Speaker 3: they said inflation will be temporary then and it turned 66 00:03:18,200 --> 00:03:20,200 Speaker 3: out to be far from the case. So they're trying 67 00:03:20,240 --> 00:03:22,480 Speaker 3: to go down something of a medal path there. I 68 00:03:22,480 --> 00:03:24,400 Speaker 3: guess it's a case of playing things very much by 69 00:03:24,480 --> 00:03:26,639 Speaker 3: ear from here as to how things unfold. 70 00:03:26,840 --> 00:03:30,359 Speaker 2: Well, I understand as well that this wasn't a unanimous decision. 71 00:03:30,440 --> 00:03:33,480 Speaker 2: There was some consideration of holding it at three point 72 00:03:33,560 --> 00:03:37,920 Speaker 2: five percent, The Reserve Bank said in considering the merits 73 00:03:37,920 --> 00:03:41,200 Speaker 2: of holding the OSA unchanged at three point five percent 74 00:03:41,240 --> 00:03:44,240 Speaker 2: for this meeting. Some members noted that this would allow 75 00:03:44,520 --> 00:03:50,000 Speaker 2: the committee to better assess whether increased economic policy uncertainty 76 00:03:50,240 --> 00:03:53,800 Speaker 2: was having a noticeable impact on household and firm behavior. 77 00:03:53,880 --> 00:03:57,119 Speaker 2: Now unpack that for us, Why would there have been 78 00:03:57,160 --> 00:03:57,880 Speaker 2: this sentiment. 79 00:03:58,360 --> 00:04:01,720 Speaker 3: Yeah, Effectively, they're saying there's the international trade will happening, 80 00:04:01,760 --> 00:04:04,120 Speaker 3: the tariffs which may be on, they may be off. 81 00:04:04,160 --> 00:04:05,040 Speaker 4: As a result of that. 82 00:04:05,080 --> 00:04:09,360 Speaker 3: Uncertainty, there is an expectation that businesses potentially hold off 83 00:04:09,440 --> 00:04:12,720 Speaker 3: from investment decisions, they hold off from hiring decisions, so 84 00:04:12,760 --> 00:04:16,280 Speaker 3: the labor market might be slower to improve households as 85 00:04:16,279 --> 00:04:18,599 Speaker 3: a result. Maybe they hold back in terms of some 86 00:04:18,640 --> 00:04:21,200 Speaker 3: of the spending growth that might have been expected as well. 87 00:04:21,360 --> 00:04:24,400 Speaker 3: So all of those factors, it may well be that 88 00:04:24,480 --> 00:04:27,279 Speaker 3: the Reserve Bank does need to provide more support, does 89 00:04:27,360 --> 00:04:30,039 Speaker 3: need to cut interest rates further, But it's not a 90 00:04:30,080 --> 00:04:32,120 Speaker 3: clear case at the moment, and I think the Bank 91 00:04:32,160 --> 00:04:35,400 Speaker 3: will be looking at confidence surveys in particular over the 92 00:04:35,440 --> 00:04:38,240 Speaker 3: next month or two to get a better gauge of 93 00:04:38,360 --> 00:04:41,599 Speaker 3: just how seriously some of this uncertainty is weighing on 94 00:04:41,680 --> 00:04:42,839 Speaker 3: people's decision making. 95 00:04:45,040 --> 00:04:52,720 Speaker 5: Internationally, developments look likely to lower global growth in the 96 00:04:53,279 --> 00:04:58,640 Speaker 5: horizon ahead of US. Both high tariffs and elevated policy 97 00:04:58,720 --> 00:05:04,120 Speaker 5: uncertainty is likely to weigh on domestic economic activity and 98 00:05:04,160 --> 00:05:09,800 Speaker 5: inflation pressures. However, there's considerable uncertainty around these judgments. 99 00:05:11,880 --> 00:05:14,760 Speaker 2: I saw the Reserve Bank also said both tariffs and 100 00:05:14,960 --> 00:05:19,760 Speaker 2: increased policy uncertainty overseas are expected to moderate New Zealand's 101 00:05:19,839 --> 00:05:24,159 Speaker 2: economic recovery and reduce medium term pressures. And you've noted 102 00:05:24,200 --> 00:05:26,800 Speaker 2: that as well. To translate that, are we just waiting 103 00:05:26,839 --> 00:05:28,479 Speaker 2: to see what Trump will do next? 104 00:05:28,760 --> 00:05:30,760 Speaker 3: Yeah, there is a bit of that, and you know 105 00:05:30,839 --> 00:05:32,760 Speaker 3: it can change from day to day very much in 106 00:05:32,839 --> 00:05:35,320 Speaker 3: terms of the news that comes out around that. But 107 00:05:35,640 --> 00:05:37,560 Speaker 3: in terms of that waiting, I mean, look, the Reserve 108 00:05:37,640 --> 00:05:41,480 Speaker 3: Bank has revised down their expectations for economic growth this year. 109 00:05:41,680 --> 00:05:43,039 Speaker 3: They do think there'll be a bit more of a 110 00:05:43,080 --> 00:05:45,000 Speaker 3: catch up when you get through into mid twenty six 111 00:05:45,040 --> 00:05:47,960 Speaker 3: and out into twenty twenty seven. But for now, the 112 00:05:48,040 --> 00:05:51,840 Speaker 3: expectation is that growth is just slower to recover as 113 00:05:51,839 --> 00:05:54,320 Speaker 3: a result of, like you say, waiting and seeing what. 114 00:05:54,440 --> 00:05:56,960 Speaker 4: Might come of the trade war, what Trump will. 115 00:05:56,839 --> 00:05:59,880 Speaker 3: Decide and how China is our largest trading partner, will 116 00:05:59,880 --> 00:06:00,520 Speaker 3: be affected. 117 00:06:00,720 --> 00:06:04,080 Speaker 2: Where are the markets at now that initial flurry of 118 00:06:04,080 --> 00:06:05,920 Speaker 2: the Trump terrists has that passed? 119 00:06:06,440 --> 00:06:06,680 Speaker 4: Yeah? 120 00:06:06,680 --> 00:06:09,240 Speaker 3: Look, I mean markets if you go back to early April, 121 00:06:09,320 --> 00:06:11,880 Speaker 3: they felt substantially they had been falling anyway, but there 122 00:06:11,920 --> 00:06:14,719 Speaker 3: was a significant drop of course following the announcement on 123 00:06:14,800 --> 00:06:18,640 Speaker 3: Liberation Day. As we've seen the tariffs paused for ninety 124 00:06:18,720 --> 00:06:24,280 Speaker 3: days across most countries, we have seen markets rebound. But then, 125 00:06:24,279 --> 00:06:26,920 Speaker 3: of course we had last week the sort of announcement 126 00:06:27,000 --> 00:06:28,080 Speaker 3: or rhetoric around. 127 00:06:27,839 --> 00:06:30,839 Speaker 4: Europe potentially being slapped with fifty percent. 128 00:06:30,640 --> 00:06:33,600 Speaker 3: Terroriffs by the US, which again was reversed out pretty quickly, 129 00:06:33,880 --> 00:06:36,560 Speaker 3: but it's just enough to sort of keep markets unsettled, and. 130 00:06:36,520 --> 00:06:38,840 Speaker 4: So there's still a fairly high degree of. 131 00:06:38,920 --> 00:06:41,839 Speaker 3: Volatility and uncertainty on financial markets at the moment. 132 00:06:45,000 --> 00:06:46,520 Speaker 4: Yeah, will be tariffs. 133 00:06:46,520 --> 00:06:51,560 Speaker 6: What they've done is other nations happened stealing the movies, 134 00:06:51,560 --> 00:06:55,440 Speaker 6: the movie making capabilities from the United States, and I 135 00:06:55,560 --> 00:06:57,680 Speaker 6: said to a couple of people, what do you think. 136 00:06:57,720 --> 00:07:01,640 Speaker 6: I've done some very strong research jobs last week, and 137 00:07:01,720 --> 00:07:04,520 Speaker 6: we're making very few movies now Hollywood have been its 138 00:07:04,480 --> 00:07:08,400 Speaker 6: slow Now you have an incompetent, grossly in competent governor 139 00:07:08,440 --> 00:07:10,840 Speaker 6: that allowed that to happen. So I'm not kids claiming 140 00:07:11,440 --> 00:07:14,760 Speaker 6: other nations, but other nations, a lot of them have 141 00:07:14,880 --> 00:07:17,920 Speaker 6: stolen our movie in this and I'm saying, if they're 142 00:07:17,960 --> 00:07:21,560 Speaker 6: not willing to make a movie inside the United States, 143 00:07:21,640 --> 00:07:24,200 Speaker 6: and we should have a tariff when movies should come in. 144 00:07:27,800 --> 00:07:31,440 Speaker 2: It does feel like we don't quite know where Trump 145 00:07:31,480 --> 00:07:34,800 Speaker 2: will go with the economy. You mentioned the steep tariffs 146 00:07:34,920 --> 00:07:37,360 Speaker 2: with the EU, then that's now been paused. The other 147 00:07:37,400 --> 00:07:40,280 Speaker 2: week he was posting about film tariffs that haven't really 148 00:07:40,280 --> 00:07:43,480 Speaker 2: gone anywhere. He's demanding now that Apple and Samsung move 149 00:07:43,600 --> 00:07:46,720 Speaker 2: phone production to the US. Are there any thoughts on 150 00:07:46,760 --> 00:07:49,240 Speaker 2: what his plans are or where this is all going. 151 00:07:49,280 --> 00:07:52,119 Speaker 2: He seems pretty committed to the idea of tariffs, even 152 00:07:52,160 --> 00:07:55,560 Speaker 2: though that didn't go down too well with the markets. 153 00:07:55,800 --> 00:07:57,920 Speaker 3: Well, they're one of the beautiful things I think is 154 00:07:57,920 --> 00:07:59,960 Speaker 3: he Phraises is one of the most beautiful words. 155 00:08:00,000 --> 00:08:00,640 Speaker 4: This is the tariff. 156 00:08:00,800 --> 00:08:03,480 Speaker 3: So look, I genuinely don't know what his endgame is. 157 00:08:03,680 --> 00:08:05,560 Speaker 3: I don't know if he even knows what his endgame 158 00:08:05,680 --> 00:08:09,160 Speaker 3: is either. I mean, certainly the volatility on financial markets 159 00:08:09,200 --> 00:08:13,040 Speaker 3: has caused of a lot of unsettlement. But what I 160 00:08:13,080 --> 00:08:15,800 Speaker 3: struggle with is take the China one as an example, 161 00:08:15,840 --> 00:08:18,880 Speaker 3: where you know, he's trumpeted the fact that we've got 162 00:08:18,920 --> 00:08:21,320 Speaker 3: the tariffs back down to thirty and ten percent across 163 00:08:21,320 --> 00:08:24,200 Speaker 3: the two countries. Well, that's where we were six weeks 164 00:08:24,240 --> 00:08:26,560 Speaker 3: ago before all of this kind of started, and you 165 00:08:26,680 --> 00:08:29,160 Speaker 3: back there, haven't achieved anything, and we don't quite know 166 00:08:29,200 --> 00:08:32,560 Speaker 3: what the end game is. So you know, there's certainly 167 00:08:32,600 --> 00:08:35,160 Speaker 3: a sense that he wants to, you know, bring employment 168 00:08:35,200 --> 00:08:38,760 Speaker 3: and production back to America, but the reality is that 169 00:08:38,880 --> 00:08:41,400 Speaker 3: can't happen overnight, and there's a hell of a lot 170 00:08:41,440 --> 00:08:44,040 Speaker 3: of pain and difficulty to be worked through before you 171 00:08:44,120 --> 00:08:46,920 Speaker 3: even get close to getting to that point where the 172 00:08:46,960 --> 00:08:49,960 Speaker 3: American economy can maybe be a bit more self sustaining 173 00:08:50,080 --> 00:08:52,240 Speaker 3: in some of the areas. And let's be real, it's 174 00:08:52,280 --> 00:08:54,440 Speaker 3: not going to be self sustaining in all the areas 175 00:08:54,440 --> 00:08:56,959 Speaker 3: he's been targeting, but some of them even the sort 176 00:08:56,960 --> 00:08:59,360 Speaker 3: of most optimistic ones. It is going to take time 177 00:08:59,480 --> 00:09:02,480 Speaker 3: for that sort of factory production to move back closer 178 00:09:02,520 --> 00:09:02,880 Speaker 3: to home. 179 00:09:02,960 --> 00:09:06,400 Speaker 2: And I can imagine if Apple phones and Samsung phones 180 00:09:06,440 --> 00:09:09,200 Speaker 2: and devices are manufactured in the US, I mean, we 181 00:09:09,240 --> 00:09:12,720 Speaker 2: could be paying eight grand for an iPhone in future, 182 00:09:12,800 --> 00:09:13,559 Speaker 2: right well. 183 00:09:13,400 --> 00:09:15,319 Speaker 3: And I think that was the sort of maybe it's 184 00:09:15,320 --> 00:09:16,440 Speaker 3: a bit of a shock to them, but you know, 185 00:09:16,480 --> 00:09:18,679 Speaker 3: the sort of analysis done that the price was going 186 00:09:18,760 --> 00:09:20,680 Speaker 3: to be two or three times what it was for 187 00:09:21,040 --> 00:09:24,080 Speaker 3: coming out of China because America just didn't have the 188 00:09:24,080 --> 00:09:26,320 Speaker 3: sort of the systems in place and the technology and 189 00:09:26,320 --> 00:09:28,880 Speaker 3: all that sort of stuff to produce at that rate. 190 00:09:29,520 --> 00:09:31,480 Speaker 3: And that's before you even start to think about some 191 00:09:31,559 --> 00:09:35,680 Speaker 3: of the retaliatory measures that China had taken in terms 192 00:09:35,679 --> 00:09:38,640 Speaker 3: of limiting the sort of exports of rare elements and 193 00:09:38,679 --> 00:09:41,560 Speaker 3: earth materials to the US to try and sort of 194 00:09:41,640 --> 00:09:45,640 Speaker 3: undermine the goal that's there. So, yeah, there's real potential 195 00:09:45,640 --> 00:09:48,720 Speaker 3: inflationary impacts or sort of shocks to the system in 196 00:09:48,760 --> 00:09:51,440 Speaker 3: terms of some of those products potentially becoming a lot 197 00:09:51,480 --> 00:10:02,559 Speaker 3: more expensive if you go down the tariff route. 198 00:10:03,640 --> 00:10:06,680 Speaker 2: It'd be pretty difficult to talk about the economy without 199 00:10:06,760 --> 00:10:10,680 Speaker 2: mentioning the G word, and that's growth. Prime Minister Christopher 200 00:10:10,720 --> 00:10:14,520 Speaker 2: Luckxon has been pretty quick to praise National's strong economic 201 00:10:14,720 --> 00:10:18,440 Speaker 2: management for the OCEI Cup. But how much can actually 202 00:10:18,520 --> 00:10:21,920 Speaker 2: be attributable to the government. How much is just dumb 203 00:10:22,040 --> 00:10:24,559 Speaker 2: luck and how much is just controlled well, I mean. 204 00:10:24,520 --> 00:10:27,680 Speaker 3: The economy was already struggling, of course, already slowing down 205 00:10:27,720 --> 00:10:30,640 Speaker 3: before National came in. We've seen you know, big interest 206 00:10:30,720 --> 00:10:33,600 Speaker 3: rate rises through twenty twenty two and into twenty twenty 207 00:10:33,600 --> 00:10:36,200 Speaker 3: three from the Reserve Bank just to try and get 208 00:10:36,200 --> 00:10:38,240 Speaker 3: that sort of excess heat and excess. 209 00:10:37,920 --> 00:10:39,679 Speaker 4: Demand out of the economy. 210 00:10:39,720 --> 00:10:44,560 Speaker 3: Anyway, I guess in terms of government policy, where potentially 211 00:10:44,559 --> 00:10:46,960 Speaker 3: the government can take some credit as they have obviously 212 00:10:47,040 --> 00:10:50,440 Speaker 3: taken a tight rain, a tight approach around fiscal spending 213 00:10:50,720 --> 00:10:53,679 Speaker 3: and continuing to sort of target savings through there. Now, 214 00:10:53,720 --> 00:10:56,800 Speaker 3: that's not great from an economic growth perspective in the 215 00:10:56,880 --> 00:10:59,760 Speaker 3: near term, because you know, the economy typically when it's 216 00:10:59,800 --> 00:11:01,760 Speaker 3: slowing down, you'd look to the government to provide a 217 00:11:01,800 --> 00:11:04,800 Speaker 3: bit of support to cushion the downturn that you're having. 218 00:11:05,000 --> 00:11:07,080 Speaker 3: It's not appropriate for government to be doing that at 219 00:11:07,080 --> 00:11:09,880 Speaker 3: the moment given the extent of growth and government spending 220 00:11:09,920 --> 00:11:13,120 Speaker 3: that we've had previously. But it does mean that if 221 00:11:13,160 --> 00:11:15,640 Speaker 3: the government is cutting back, it does mean the Reserve 222 00:11:15,679 --> 00:11:18,120 Speaker 3: Bank does have a bit more scope to maybe bring 223 00:11:18,160 --> 00:11:21,800 Speaker 3: those interest rates down because across the economy, as the 224 00:11:21,840 --> 00:11:24,600 Speaker 3: sort of excess demand, the excess heat through the economy 225 00:11:24,840 --> 00:11:26,920 Speaker 3: is being wound back a bit more quickly than if 226 00:11:26,960 --> 00:11:29,720 Speaker 3: the government was still throwing money out the door. 227 00:11:29,760 --> 00:11:32,520 Speaker 2: With Gay abandon right, So the government does deserve a 228 00:11:32,679 --> 00:11:33,199 Speaker 2: part on the. 229 00:11:33,160 --> 00:11:35,720 Speaker 4: Back look to some degree. 230 00:11:36,120 --> 00:11:38,520 Speaker 3: Look, there's a consistency at the moment, I think between 231 00:11:38,720 --> 00:11:41,560 Speaker 3: fiscal policy and monetary policy, or there has been in 232 00:11:41,640 --> 00:11:44,719 Speaker 3: terms of trying to get that economy back, as I say, 233 00:11:44,720 --> 00:11:47,120 Speaker 3: at a more sort of sustainable growth rate than what 234 00:11:47,160 --> 00:11:48,160 Speaker 3: we've had previously. 235 00:11:48,360 --> 00:11:50,559 Speaker 4: And I think, look if interest if. 236 00:11:50,200 --> 00:11:53,840 Speaker 3: The government was spending more than it is at the moment, 237 00:11:54,000 --> 00:11:56,640 Speaker 3: then there is potential that interest rates wouldn't be able 238 00:11:56,640 --> 00:11:58,800 Speaker 3: to be as cut by as much as they have been. 239 00:12:00,760 --> 00:12:05,000 Speaker 7: This budget supports the economic recovery while also taking a 240 00:12:05,080 --> 00:12:10,880 Speaker 7: longer term view with initiatives to boost investment, growth and savings. 241 00:12:11,440 --> 00:12:15,439 Speaker 7: Kiwis have been battling through an extended period of high inflation, 242 00:12:16,000 --> 00:12:20,400 Speaker 7: high interest rates, and low growth times are still tough 243 00:12:20,440 --> 00:12:25,040 Speaker 7: for many. The good news is that strong economic and 244 00:12:25,080 --> 00:12:30,559 Speaker 7: physical management is ensuring our recovery is underway, supported by 245 00:12:30,600 --> 00:12:34,119 Speaker 7: lower interest rates and a strong export performance. 246 00:12:37,480 --> 00:12:40,800 Speaker 2: What about the impact of the budget that has emphasized 247 00:12:40,840 --> 00:12:44,920 Speaker 2: a lot of individual responsibility towards things like savings and 248 00:12:44,960 --> 00:12:47,720 Speaker 2: looking after your kids when they grow up. What impact 249 00:12:47,920 --> 00:12:50,880 Speaker 2: do you forecast that having on the budget in the 250 00:12:50,920 --> 00:12:52,080 Speaker 2: short to medium term. 251 00:12:52,400 --> 00:12:54,680 Speaker 3: Yeah, I mean, I think in terms of the way 252 00:12:54,720 --> 00:12:58,280 Speaker 3: the economy is a performing going forward. Probably the sort 253 00:12:58,280 --> 00:13:01,320 Speaker 3: of headline grabber was around in VS Boost and it's 254 00:13:01,320 --> 00:13:05,080 Speaker 3: been interesting to see the forecast of Treasury particular around that, 255 00:13:05,120 --> 00:13:08,360 Speaker 3: where they've said, okay, our baseline forecasts for investment by 256 00:13:08,400 --> 00:13:11,520 Speaker 3: businesses going forward will lower because of global conditions and 257 00:13:11,559 --> 00:13:13,960 Speaker 3: the uncertainty out there. But when we bring in the 258 00:13:14,000 --> 00:13:17,599 Speaker 3: investment boost policy, we do think it just will encourage 259 00:13:17,640 --> 00:13:20,720 Speaker 3: a bit more investment. And while that doesn't necessarily impact 260 00:13:20,760 --> 00:13:24,319 Speaker 3: growth a great deal immediately, it does facilitate more growth 261 00:13:24,720 --> 00:13:27,080 Speaker 3: a bit further down the track. So for me, that's 262 00:13:27,160 --> 00:13:30,360 Speaker 3: probably one of the key parts of getting a bit 263 00:13:30,360 --> 00:13:33,200 Speaker 3: more momentum into the economy. Not necessarily this year, but 264 00:13:33,200 --> 00:13:35,480 Speaker 3: if we look forward to twenty twenty six and twenty 265 00:13:35,480 --> 00:13:38,000 Speaker 3: seven just helps to provide a bit more growth coming through. 266 00:13:38,160 --> 00:13:39,520 Speaker 1: We're always looking overseas. 267 00:13:39,520 --> 00:13:41,920 Speaker 2: First it was COVID and now we're just on the 268 00:13:42,040 --> 00:13:45,000 Speaker 2: edge of our seats looking to see what Trump does 269 00:13:45,040 --> 00:13:48,440 Speaker 2: and how that affects our economy. Because we live in 270 00:13:48,520 --> 00:13:53,320 Speaker 2: such a globally connected world. Is there any escaping those 271 00:13:53,480 --> 00:13:54,960 Speaker 2: overseas pressures? 272 00:13:55,320 --> 00:13:55,400 Speaker 4: Do? 273 00:13:55,440 --> 00:13:56,400 Speaker 1: We just have to live with them? 274 00:13:56,600 --> 00:13:57,320 Speaker 4: Pretty much, we do. 275 00:13:57,559 --> 00:14:00,559 Speaker 3: And that's not just the fact that the the whole 276 00:14:00,720 --> 00:14:04,280 Speaker 3: global economy is interconnection, but from a New Zealand's perspective, 277 00:14:04,320 --> 00:14:07,000 Speaker 3: you know, we are so reliant on exports, is a 278 00:14:07,080 --> 00:14:11,120 Speaker 3: key part of our economy and driving our growth story, 279 00:14:11,360 --> 00:14:13,360 Speaker 3: and certainly at the moment when we look at the 280 00:14:13,559 --> 00:14:16,840 Speaker 3: expected recovery in New Zealand over the next twelve to 281 00:14:16,920 --> 00:14:20,240 Speaker 3: eighteen months, two key contributors to that right. One is 282 00:14:20,280 --> 00:14:23,240 Speaker 3: lower interest rates putting more money back into household pockets. 283 00:14:23,280 --> 00:14:25,760 Speaker 3: And you know, eventually over time as they roll off 284 00:14:25,840 --> 00:14:29,160 Speaker 3: higher fixed rate, as the labor market turns and consumer 285 00:14:29,200 --> 00:14:31,840 Speaker 3: confidence improves, more of that money will be spent and 286 00:14:31,880 --> 00:14:35,120 Speaker 3: flow through the economy. But the probably even bigger aspect 287 00:14:35,160 --> 00:14:38,120 Speaker 3: of the recovery we're looking at at the moment is 288 00:14:38,240 --> 00:14:40,640 Speaker 3: just around the sort of high export prices for the 289 00:14:40,760 --> 00:14:44,480 Speaker 3: likes of dairy products, meat, horticulture. Those are all really 290 00:14:44,480 --> 00:14:47,160 Speaker 3: good levels and we're expecting that money to flow through 291 00:14:47,440 --> 00:14:49,600 Speaker 3: into provincial economies over the next. 292 00:14:49,720 --> 00:14:53,280 Speaker 4: Year or so and stimulate more growth. It's quite different 293 00:14:53,280 --> 00:14:55,560 Speaker 4: to the sort of recovery that New Zealand has had. 294 00:14:55,960 --> 00:14:59,200 Speaker 3: From an economic perspective, probably over the last thirty years, 295 00:14:59,200 --> 00:15:01,640 Speaker 3: where a lot of the time our economic fortunes have 296 00:15:01,760 --> 00:15:06,120 Speaker 3: been driven by changes in migration and population growth and 297 00:15:06,160 --> 00:15:07,600 Speaker 3: that moving around. 298 00:15:07,400 --> 00:15:09,400 Speaker 4: Quite a lot. This time around, it it's more like 299 00:15:09,440 --> 00:15:12,320 Speaker 4: an early nineteen nineties or even prior to that recovery, 300 00:15:12,320 --> 00:15:15,560 Speaker 4: where it is those export prices, that export revenue coming in, 301 00:15:15,920 --> 00:15:16,560 Speaker 4: there's more. 302 00:15:16,360 --> 00:15:18,480 Speaker 3: Money for farmers, they get out and spend it, and 303 00:15:18,520 --> 00:15:22,160 Speaker 3: eventually it flows through from provincial areas and flows through 304 00:15:22,160 --> 00:15:26,280 Speaker 3: into the urban centers as well. So yeah, from that perspective, 305 00:15:26,360 --> 00:15:29,160 Speaker 3: g the global economy is a real sort of lynchpin 306 00:15:29,400 --> 00:15:31,400 Speaker 3: of where New Zealand is going at the moment. 307 00:15:31,880 --> 00:15:35,800 Speaker 2: Gareth, is there a fear that the positive trajectory of 308 00:15:35,840 --> 00:15:38,560 Speaker 2: our economy has hit a kind of juncture because there 309 00:15:38,640 --> 00:15:41,240 Speaker 2: was acceleration that we saw at the end of twenty 310 00:15:41,280 --> 00:15:43,680 Speaker 2: twenty four, even the beginning of this year. But now 311 00:15:43,720 --> 00:15:46,160 Speaker 2: we've got all this global unpredictability. 312 00:15:46,440 --> 00:15:48,240 Speaker 1: What do you think will happen next? 313 00:15:48,480 --> 00:15:50,280 Speaker 3: Yeah, there is a sentence I get from getting out 314 00:15:50,280 --> 00:15:52,800 Speaker 3: there and talking to businesses that late twenty four early 315 00:15:52,800 --> 00:15:55,640 Speaker 3: twenty twenty five, the data we were getting through, the 316 00:15:55,680 --> 00:15:58,360 Speaker 3: messages we were getting from talking to people were they 317 00:15:58,360 --> 00:16:01,160 Speaker 3: weren't massively positive, but there was certainly an improvement on 318 00:16:01,240 --> 00:16:03,760 Speaker 3: the sort of wholesale pessimism that we'd had through much 319 00:16:03,880 --> 00:16:06,200 Speaker 3: twenty twenty four. And I get a sense just the 320 00:16:06,280 --> 00:16:09,520 Speaker 3: last three or four weeks again talking to people, that 321 00:16:09,520 --> 00:16:12,880 Speaker 3: that positivity has just evaporated away a bit. That's not 322 00:16:12,920 --> 00:16:16,440 Speaker 3: necessarily to disappeared across all parts of the economy, but 323 00:16:16,480 --> 00:16:18,880 Speaker 3: certainly some of the people I talked to are going, Yeah, 324 00:16:19,000 --> 00:16:20,800 Speaker 3: it's just it seems to just. 325 00:16:20,840 --> 00:16:22,840 Speaker 4: That momentum have petered out a little bit. 326 00:16:23,200 --> 00:16:26,160 Speaker 3: And I think that's partly a function of those international 327 00:16:26,200 --> 00:16:28,360 Speaker 3: events that we've talked about and the tariffs and the 328 00:16:28,480 --> 00:16:31,840 Speaker 3: uncertainty associated with that, but it is also partly a 329 00:16:31,880 --> 00:16:34,840 Speaker 3: function that you know, there's still aspects within the new 330 00:16:34,920 --> 00:16:38,680 Speaker 3: Zealand economy, where take consumer confidence for example, it's improved, 331 00:16:38,720 --> 00:16:41,280 Speaker 3: but it's still not that great. People still don't feel 332 00:16:41,320 --> 00:16:44,600 Speaker 3: fantastic about their own financial situation. So it's almost a 333 00:16:44,680 --> 00:16:48,080 Speaker 3: sense of some of that turnaround or emerging turnaround we 334 00:16:48,120 --> 00:16:50,240 Speaker 3: saw in late twenty twenty four was maybe a little 335 00:16:50,280 --> 00:16:53,680 Speaker 3: bit premature and some of the fundamentals behind it still 336 00:16:53,720 --> 00:16:56,800 Speaker 3: need to improve further. Get the labor market improving a bit, 337 00:16:57,080 --> 00:16:59,600 Speaker 3: get employment growth picking up, and then you'll have a 338 00:16:59,600 --> 00:17:04,440 Speaker 3: bit more solid base to start accelerating economic growth from 339 00:17:04,480 --> 00:17:06,720 Speaker 3: notwithstanding what may be happening internationally. 340 00:17:06,760 --> 00:17:09,480 Speaker 2: Of course, thanks for joining us, Gareth, Thank you very much, 341 00:17:09,520 --> 00:17:16,240 Speaker 2: my pleasure. That's it for this episode of The Front Page. 342 00:17:16,600 --> 00:17:19,919 Speaker 2: You can read more about today's stories and extensive news 343 00:17:20,000 --> 00:17:22,920 Speaker 2: coverage at enzidherld dot co dot nz. 344 00:17:23,720 --> 00:17:26,080 Speaker 1: The Front Page is produced by Ethan. 345 00:17:25,800 --> 00:17:29,600 Speaker 2: Sills and Richard Martin, who is also our sound engineer. 346 00:17:30,080 --> 00:17:31,560 Speaker 1: I'm Chelsea Daniels. 347 00:17:32,160 --> 00:17:35,320 Speaker 2: Subscribe to The Front Page on iHeartRadio or wherever you 348 00:17:35,359 --> 00:17:39,120 Speaker 2: get your podcasts, and tune in tomorrow for another look 349 00:17:39,200 --> 00:17:41,760 Speaker 2: behind the headlines.