August 4, 2025 • 7 mins
Independent economist comments on US tariffs, a drop in OCR, the unemployment rate, and the threat of stagflation.
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Speaker 1 (00:00):
Cameron Bagriy is an independent economist. Lots to talk about
at the moment. We've got tariffs announced last Friday, ocr
to be announced, the next cut hopefully on August the twentieth,
and tomorrow unemployment figures are due to come out. Cameron,
let's start with tariffs. How badly is this going to
affect the New Zealand economy going from ten to fifteen percent?
Speaker 2 (00:24):
No, it's a marginal tweak. I guess you can look
at it through two lenses. In the hat, probably three
lessons means, just look the number one, while we went
from ten to fifteen, there's a little bit beyond me. Secondly,
if you look at ten or fifteen, it's a hell
of a lot lower and what we're seeing across the
whole lot of other countries. So we can probably take
a little bit of deep present sort. I think, well,
(00:46):
wasn't that bad is what we've seen in the lots
of Brazil. But yeah, fifteen percent is still fifteen percent,
and that makes you less competitive, although in a relative sense,
our beef bang into the United States is going to
be a hell of a lot more competitive lots of
the Brazilian product, Yeah, but not.
Speaker 1 (01:02):
As competitive as the Ulsie beet.
Speaker 2 (01:05):
And that's the one that I guess surprises us. Why
Australia got ten and we got fifteen Maybe because Australia
is going to buy a whole lot more stuff offt
the United States military equipment, etc. Etc. You know, they
just got a bigger cheap book.
Speaker 1 (01:19):
Well, they run a trade deficit with the US whereas
we don't. We're almost even stevens. But you would think
Trump splitting here is a wee bit on that one.
Speaker 2 (01:29):
Yeah, well that's what The science behind this makes no sense.
In fact, the economics behind while we're gone around serving
tariff on various countries around the globe, is pretty marginal.
But what we know is that we now live in
an environment or a system where what it's called power
is now challenging rules. And the power based system faces
(01:53):
the big boys, the big countries, and America's big and
we're not.
Speaker 1 (01:59):
Could this drive the world economy into a like a
global recession or am I being two glass half full?
Speaker 2 (02:05):
There? No, there is a risk. And if you have
a look at the OECD's loads projections, if you ever
look at the IMS LOADUS projections that they're projecting the
world to grow around three percent for the next couple
of years, which a face fairly sounds pretty good. That
You've got to remember the world economy on a lot
of levels is driven by a the United States, but
(02:26):
be a whole lot of the emerging market economies, and
in you're growing at six year after year, there's the
stuff three percent. It's who hum. But if you read
into what the OECD and iome for said, it's got
cavin into or written all over it. I e B
I be aware in terms of the numbers because the
risk is to the down side.
Speaker 1 (02:46):
Now Tom mcclay's going to jump on a plane fly
over to Washington, do is damn justin good on him
to try and get us a better deal. He's peeing
into the northwestern right.
Speaker 2 (02:56):
I'd say say, yeah, yeah, pay my head off to
Tide doing a remarkably good job, along with a whole
lot of the other ministers, putting New Zeon back on
the map in regard to international creit. And there's growing
hope there's going to be some sort of deal between
New zeal And India Twenda before the end of the year.
But I had tip to hard work and hopefully we're
going to see a bit of payoff. But Americans, now,
(03:18):
I think this thing's written in his own.
Speaker 1 (03:20):
Don't want to pick my economic mind against yours, Cameron
bagriy better, do want your opinion on this one. See,
I think the best thing we could do in this
country has dropped the official cash rate, and drop it quickly.
I know we're going to get one on August the twentieth.
But you've got guys like John Key running around saying
we need to cut one hundred basis points. What say you?
Speaker 2 (03:42):
Oh, look, I think the Reserve Bank's got another one,
maybe two up their sleeve. We economy bounced out a
recession the end of twenty and twenty four were a
decent quarter the start of two than twenty five, it
looks so we've done. David long In now stopped for
a cup of tea. You know, the rural sects been
doing a lot of the heavy lifting over this last
(04:02):
sort of sixty nine months to get the economy back
on the feet. You'd sort of expect that the impact
of lower interest rates by the housing market the construction
sector would start to flow and we get that sort
of second round, you feet, more propulsion. We're not seeing
that at the moment. Why because the fundamental is towards housing.
The construction seat that don't look good at the moment
in regard to population growth, that's demand relative to what's
(04:26):
there in the market. We've still got these structural problems.
I had to the government and announced when they came
out in regard to dropping NCA getting stuck into the
education sector. We need to fix the roads. Those sort
of things are just inhibiteds. They're like a rugby player
that's carrying an injury, and you're carrying an injury, you're
not going to get top performance. And then Zealoty kind
of at the moment, unfortunately, is carrying a whole lot
(04:47):
of structural injuries. And the zum band can't fix dropping
interest rates as a sugar rust. And you've got to be
careful about how much sugar that you pump into the
economic system because it can put you up on a
bit of an artificial whole.
Speaker 1 (05:01):
So three point twenty five percent at the moment, you're
suggesting two point seventy five at best.
Speaker 2 (05:07):
Well at best, sobjet to what's going on around the
globe now, the Chinese economy, for example, that the IMF
just upgraded the reestimates for where they thought the Chinese
economy is going to be over twenty twenty five because
they've exceded expectations. So, yeah, that's a piece of good news.
But if we see China or the United States economy
(05:28):
start to slow rapidly and this global economy starts to
go off rails, then you've probably got the recipe for
the castraight game to two percent. And that's a scenario
that's a possibility. It's not the central scenario that people
are painting at the moment, So we need to be
careful we wish for Okay.
Speaker 1 (05:43):
Okay, let's just finish with the unemployment figures I think
due out tomorrow. The experts or the pundits are picking
five point three percent, which on the face of it,
doesn't appear incredibly high to some of the other unemployment
rates we've had that have been close to double digit.
But are we in danger of the stagflation? That is
a word that's being thrown around at the moment.
Speaker 2 (06:06):
Yeah, and it's an arsty word that we don't like
to see. But if you look at the Reserve Bank's
latest estimate for second quarter GDP, and it's the GM quarter.
It's a negative number. I'm not reading too much into
possibly every one negative number at the moment, but there's
a lot of uncertainty up there, whether you look at
(06:27):
globally we create tensions or where you look at potential
politically what we're seeing here in New Zealand. But the
housing market is not taking over that economic baton. We've
got those structural issues, yes, so the growth side of
the leader is still pretty tepid. At the same time,
we've got rising headline in frost. What's good for the
farmers is not necessarily good for people at the supermarkets.
And we're having a good old fashioned debate over the
(06:48):
price of butter, which surprises me because you know, pound
of butter is less than a point of beer. So
we need sometimes you need to put it in a
route of sense in regard to what's going on. But
electricity bills, local authorities rates, you, they're all on the up.
So there's some aspeaks of this inflation we dynamic that's
got a little bit of stickiness, and inflation is a
(07:11):
thief that steers money out of people's pockets, and people
don't like that thief. So we want to get rid
of inflation. Unfortunately, how to get rid of inflation, you
need to have weak growth, because when you've got strong
growth or an economy that's ripping alarm, people can start
to put up prices. It's very difficult to put up
prices if you're a retailer or if you're a construction
firm when you've got no demand. On the other side, well.
Speaker 1 (07:30):
I absolutely agree with you. We're barking up the wrong
tree with butter insurance rates, energy costs, those are the
things we really need to concentrate on. Cameron Bagriy two
great economic minds, Well not quite, but I did appreciate
your input.
Speaker 2 (07:43):
All the best, don't
Cameron Bagriy is an independent economist. Lots to talk about
at the moment. We've got tariffs announced last Friday, ocr
to be announced, the next cut hopefully on August the twentieth,
and tomorrow unemployment figures are due to come out. Cameron,
let's start with tariffs. How badly is this going to
affect the New Zealand economy going from ten to fifteen percent?
Speaker 2 (00:24):
No, it's a marginal tweak. I guess you can look
at it through two lenses. In the hat, probably three
lessons means, just look the number one, while we went
from ten to fifteen, there's a little bit beyond me. Secondly,
if you look at ten or fifteen, it's a hell
of a lot lower and what we're seeing across the
whole lot of other countries. So we can probably take
a little bit of deep present sort. I think, well,
(00:46):
wasn't that bad is what we've seen in the lots
of Brazil. But yeah, fifteen percent is still fifteen percent,
and that makes you less competitive, although in a relative sense,
our beef bang into the United States is going to
be a hell of a lot more competitive lots of
the Brazilian product, Yeah, but not.
Speaker 1 (01:02):
As competitive as the Ulsie beet.
Speaker 2 (01:05):
And that's the one that I guess surprises us. Why
Australia got ten and we got fifteen Maybe because Australia
is going to buy a whole lot more stuff offt
the United States military equipment, etc. Etc. You know, they
just got a bigger cheap book.
Speaker 1 (01:19):
Well, they run a trade deficit with the US whereas
we don't. We're almost even stevens. But you would think
Trump splitting here is a wee bit on that one.
Speaker 2 (01:29):
Yeah, well that's what The science behind this makes no sense.
In fact, the economics behind while we're gone around serving
tariff on various countries around the globe, is pretty marginal.
But what we know is that we now live in
an environment or a system where what it's called power
is now challenging rules. And the power based system faces
(01:53):
the big boys, the big countries, and America's big and
we're not.
Speaker 1 (01:59):
Could this drive the world economy into a like a
global recession or am I being two glass half full?
Speaker 2 (02:05):
There? No, there is a risk. And if you have
a look at the OECD's loads projections, if you ever
look at the IMS LOADUS projections that they're projecting the
world to grow around three percent for the next couple
of years, which a face fairly sounds pretty good. That
You've got to remember the world economy on a lot
of levels is driven by a the United States, but
(02:26):
be a whole lot of the emerging market economies, and
in you're growing at six year after year, there's the
stuff three percent. It's who hum. But if you read
into what the OECD and iome for said, it's got
cavin into or written all over it. I e B
I be aware in terms of the numbers because the
risk is to the down side.
Speaker 1 (02:46):
Now Tom mcclay's going to jump on a plane fly
over to Washington, do is damn justin good on him
to try and get us a better deal. He's peeing
into the northwestern right.
Speaker 2 (02:56):
I'd say say, yeah, yeah, pay my head off to
Tide doing a remarkably good job, along with a whole
lot of the other ministers, putting New Zeon back on
the map in regard to international creit. And there's growing
hope there's going to be some sort of deal between
New zeal And India Twenda before the end of the year.
But I had tip to hard work and hopefully we're
going to see a bit of payoff. But Americans, now,
(03:18):
I think this thing's written in his own.
Speaker 1 (03:20):
Don't want to pick my economic mind against yours, Cameron
bagriy better, do want your opinion on this one. See,
I think the best thing we could do in this
country has dropped the official cash rate, and drop it quickly.
I know we're going to get one on August the twentieth.
But you've got guys like John Key running around saying
we need to cut one hundred basis points. What say you?
Speaker 2 (03:42):
Oh, look, I think the Reserve Bank's got another one,
maybe two up their sleeve. We economy bounced out a
recession the end of twenty and twenty four were a
decent quarter the start of two than twenty five, it
looks so we've done. David long In now stopped for
a cup of tea. You know, the rural sects been
doing a lot of the heavy lifting over this last
(04:02):
sort of sixty nine months to get the economy back
on the feet. You'd sort of expect that the impact
of lower interest rates by the housing market the construction
sector would start to flow and we get that sort
of second round, you feet, more propulsion. We're not seeing
that at the moment. Why because the fundamental is towards housing.
The construction seat that don't look good at the moment
in regard to population growth, that's demand relative to what's
(04:26):
there in the market. We've still got these structural problems.
I had to the government and announced when they came
out in regard to dropping NCA getting stuck into the
education sector. We need to fix the roads. Those sort
of things are just inhibiteds. They're like a rugby player
that's carrying an injury, and you're carrying an injury, you're
not going to get top performance. And then Zealoty kind
of at the moment, unfortunately, is carrying a whole lot
(04:47):
of structural injuries. And the zum band can't fix dropping
interest rates as a sugar rust. And you've got to be
careful about how much sugar that you pump into the
economic system because it can put you up on a
bit of an artificial whole.
Speaker 1 (05:01):
So three point twenty five percent at the moment, you're
suggesting two point seventy five at best.
Speaker 2 (05:07):
Well at best, sobjet to what's going on around the
globe now, the Chinese economy, for example, that the IMF
just upgraded the reestimates for where they thought the Chinese
economy is going to be over twenty twenty five because
they've exceded expectations. So, yeah, that's a piece of good news.
But if we see China or the United States economy
(05:28):
start to slow rapidly and this global economy starts to
go off rails, then you've probably got the recipe for
the castraight game to two percent. And that's a scenario
that's a possibility. It's not the central scenario that people
are painting at the moment, So we need to be
careful we wish for Okay.
Speaker 1 (05:43):
Okay, let's just finish with the unemployment figures I think
due out tomorrow. The experts or the pundits are picking
five point three percent, which on the face of it,
doesn't appear incredibly high to some of the other unemployment
rates we've had that have been close to double digit.
But are we in danger of the stagflation? That is
a word that's being thrown around at the moment.
Speaker 2 (06:06):
Yeah, and it's an arsty word that we don't like
to see. But if you look at the Reserve Bank's
latest estimate for second quarter GDP, and it's the GM quarter.
It's a negative number. I'm not reading too much into
possibly every one negative number at the moment, but there's
a lot of uncertainty up there, whether you look at
(06:27):
globally we create tensions or where you look at potential
politically what we're seeing here in New Zealand. But the
housing market is not taking over that economic baton. We've
got those structural issues, yes, so the growth side of
the leader is still pretty tepid. At the same time,
we've got rising headline in frost. What's good for the
farmers is not necessarily good for people at the supermarkets.
And we're having a good old fashioned debate over the
(06:48):
price of butter, which surprises me because you know, pound
of butter is less than a point of beer. So
we need sometimes you need to put it in a
route of sense in regard to what's going on. But
electricity bills, local authorities rates, you, they're all on the up.
So there's some aspeaks of this inflation we dynamic that's
got a little bit of stickiness, and inflation is a
(07:11):
thief that steers money out of people's pockets, and people
don't like that thief. So we want to get rid
of inflation. Unfortunately, how to get rid of inflation, you
need to have weak growth, because when you've got strong
growth or an economy that's ripping alarm, people can start
to put up prices. It's very difficult to put up
prices if you're a retailer or if you're a construction
firm when you've got no demand. On the other side, well.
Speaker 1 (07:30):
I absolutely agree with you. We're barking up the wrong
tree with butter insurance rates, energy costs, those are the
things we really need to concentrate on. Cameron Bagriy two
great economic minds, Well not quite, but I did appreciate
your input.
Speaker 2 (07:43):
All the best, don't
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