1 00:00:00,000 --> 00:00:03,240 Speaker 1: We're about to overtake the Aussies on GDP. That's the forecast. 2 00:00:03,440 --> 00:00:06,120 Speaker 1: GDP growth here should hit two point four percent by 3 00:00:06,120 --> 00:00:08,800 Speaker 1: the end of this year, the Aussies two percent twenty 4 00:00:08,800 --> 00:00:14,040 Speaker 1: twenty six, US three point one percent, the Aussies two percent. 5 00:00:14,680 --> 00:00:17,319 Speaker 1: But the Reserve Bank roller coaster we've been on with 6 00:00:17,440 --> 00:00:20,840 Speaker 1: the induced recession means that we're left with more spare 7 00:00:20,880 --> 00:00:24,000 Speaker 1: capacity in our economy. Statist Ranchard is Westpac with west 8 00:00:24,040 --> 00:00:26,119 Speaker 1: Pac and has been comparing us with the Aussies and 9 00:00:26,200 --> 00:00:29,240 Speaker 1: joins me this morning. Statistic, good morning, Good morning, Ryan. 10 00:00:29,440 --> 00:00:31,560 Speaker 1: So we're going to be growing faster but still have 11 00:00:31,760 --> 00:00:33,600 Speaker 1: higher unemployment for a while longer. 12 00:00:33,640 --> 00:00:38,040 Speaker 2: Why is that exactly? We've had a deeper recession, as 13 00:00:38,080 --> 00:00:40,640 Speaker 2: you say, because we had tighter policy in the past 14 00:00:40,640 --> 00:00:43,720 Speaker 2: few years. It meant that we came to the last 15 00:00:43,760 --> 00:00:47,200 Speaker 2: downturn in a softer position in the Australians. And now 16 00:00:47,360 --> 00:00:49,639 Speaker 2: while we're going to be growing, we've still got that 17 00:00:49,800 --> 00:00:53,120 Speaker 2: lingering softness in the labor market. Means that it's still 18 00:00:53,120 --> 00:00:54,800 Speaker 2: going to be tough for a lot of us in 19 00:00:54,840 --> 00:00:55,720 Speaker 2: the next few years. 20 00:00:55,800 --> 00:00:58,840 Speaker 1: So it doesn't matter how how much we how good 21 00:00:58,880 --> 00:01:01,400 Speaker 1: we get in the coming year is we're still kind 22 00:01:01,400 --> 00:01:04,040 Speaker 1: of bulged down by our past. 23 00:01:05,120 --> 00:01:07,320 Speaker 2: We are getting better, but we do have to deal 24 00:01:07,319 --> 00:01:09,959 Speaker 2: with the fact that we're coming from a soft position, 25 00:01:10,280 --> 00:01:12,319 Speaker 2: and it's been pretty tough on a lot of fronts. 26 00:01:12,360 --> 00:01:14,880 Speaker 2: We did have quite strong inflation the last few years, 27 00:01:15,120 --> 00:01:18,319 Speaker 2: stronger than the Australians, even with higher interest rates, So 28 00:01:18,680 --> 00:01:21,040 Speaker 2: the downtown that we had was necessary to get some 29 00:01:21,080 --> 00:01:24,200 Speaker 2: of those cost of living pressures back for more manageable positions. 30 00:01:24,840 --> 00:01:27,840 Speaker 1: Our reserve bank, obviously with the OCO, went up like 31 00:01:27,880 --> 00:01:29,560 Speaker 1: a rocket and then down like a ton of bricks. 32 00:01:30,319 --> 00:01:33,760 Speaker 1: Which reserve bank, if you had to pick one, performed 33 00:01:33,840 --> 00:01:35,000 Speaker 1: better over that period. 34 00:01:36,040 --> 00:01:39,520 Speaker 2: I think these pluses and minuses from both strategy. Even 35 00:01:39,560 --> 00:01:42,320 Speaker 2: with those larger interest rate increases here we still had 36 00:01:42,360 --> 00:01:44,200 Speaker 2: some pretty tough inflation, and if we took a more 37 00:01:44,240 --> 00:01:47,600 Speaker 2: gradual approach we could be still dealing with much stronger 38 00:01:47,600 --> 00:01:50,640 Speaker 2: cost of living pressures. The more moderate approach in Australia 39 00:01:50,720 --> 00:01:53,320 Speaker 2: meant that they did have a firmer labor market, but 40 00:01:53,400 --> 00:01:56,200 Speaker 2: their interest rates are still tight now and even though 41 00:01:56,200 --> 00:01:59,160 Speaker 2: they're coming down, MW Zealand's got a better growth position. 42 00:01:59,520 --> 00:02:00,720 Speaker 2: It's a trade off to. 43 00:02:00,720 --> 00:02:05,160 Speaker 1: Make what's driving their growth. What's driving ours. 44 00:02:05,320 --> 00:02:08,280 Speaker 2: In New Zealand. What we are seeing are those improvements 45 00:02:08,280 --> 00:02:10,840 Speaker 2: in commodity export incomes. You're just seeing how we're seeing 46 00:02:10,880 --> 00:02:14,240 Speaker 2: better employment prospects in areas like christ Church in parts 47 00:02:14,280 --> 00:02:16,880 Speaker 2: of the South Island, and those lower interest rates here 48 00:02:17,160 --> 00:02:19,320 Speaker 2: they are going to be boosting growth, but it's taking 49 00:02:19,360 --> 00:02:22,200 Speaker 2: a while to come through across the ditch. They're still 50 00:02:22,240 --> 00:02:25,079 Speaker 2: seeing some firmness in the demand story, but some of 51 00:02:25,120 --> 00:02:27,440 Speaker 2: the big drivers from the past that are easing off, 52 00:02:27,639 --> 00:02:31,079 Speaker 2: especially their fiscal policy which drive a lot of activity recently. 53 00:02:31,639 --> 00:02:33,960 Speaker 1: So tease, appreciate your time this morning, great analysis as 54 00:02:33,960 --> 00:02:37,680 Speaker 1: always to Teach Ranchard, Westpac New Zealand senior economists. For 55 00:02:37,800 --> 00:02:40,760 Speaker 1: more from earlier edition with Ryan Bridge, listen live to 56 00:02:40,880 --> 00:02:44,080 Speaker 1: News Talks it Be from five am weekdays, or follow 57 00:02:44,120 --> 00:02:45,639 Speaker 1: the podcast on iHeartRadio.