Brad Olsen: Infometics Principal Economist outlines economic predictions for 2025

The Prime Minister has copped some backlash over the state of the economy during his morning media round.

This follows two disappointing showings for the coalition in the polls, with Chris Luxon's standing as preferred Prime Minister taking a hit.

Luxon has stayed optimistic - and Infometics Principal Economist Brad Olsen is hopeful things will turn around later in the year.

"Those interest rates are coming down - but it takes a bit of time for everyone to re-fix onto them. And at the same time, data out recently showed that the unemployment rate has been going up. So I do think we're in that odd period...but there are those greener shoots showing through."

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Episode Transcript

Speaker 1 (00:00):
Brad Olsen, the Prime Minister, was grilled about his poor
poll numbers on his morning media around this morning, and
he kept quoting one economist when promising that things will
get better. You know, it is some green sheets.

Speaker 2 (00:13):
I mean I saw, you know, brad Olsen saying by
the end of the by the end of the year
that we forty five million dollars extra week in Kiwis
pockets to spend in the economy. That's all good stuff
as interest rates come down.

Speaker 1 (00:23):
Brad Olsen is of course Informetrics principal economisties with us
this evening high Brad, good evening. So in reference to
the Prime Minister's comments, when will we be feeling better,
how will we be feeling about the economy by the
end of the year. Yeah, I mean we do expect.

Speaker 2 (00:37):
Things to continually get better. Of course, those interest rates
are coming down, but it takes a bit of time
for everyone to refix on to them. And at the
same time, you know, data out recently showed that the
unemployment rate has been going up. So I do think
we're in that odd period and very challenging period still
where there's a lot of hurts and a lot of
economic challenge around, but there are those greeners shoots showing through.

(01:00):
The Prime Minister referenced one of the numbers that we've
recently quoted when we looked at our latest economic forecast,
which is that by the end of this year, we
expect around forty five million dollars a week more to
be available for households to spend out in the economy
that previously they had to put on those much higher
mortgage rates. So that's certainly helping, and you're starting to
see that in some areas across business, you're starting to

(01:24):
see the likes of job ads that have plateaued out
and similar but in reference I mean you mentioned Ryan
that some of those pole results, it was interesting some
of them last night showing the likes of households economic
outlook as well. Households are saying that you know, there's
still nearly a quarter that are saying they expect things
to be worse in a year's time, and given the

(01:45):
interest rates are coming down, that's of course quite concerning.
So it shows that the economic recovery is not going
to be balanced across everyone. There are some definite differences
across but we are a lot more confident and that
comes after some pretty difficult economic time.

Speaker 1 (02:00):
Yeah, the RBNS dead, We're everyone sort of expecting a
half a percent when they go to meet next week.
But after that, do you expect that they will signal
or maybe even during the meeting will signal that they
will go further before November even you know, perhaps even
further than what we predict.

Speaker 2 (02:17):
Well, in a sense, we're actually wondering at infometrics the opposite.
And this has been a slightly more controversial view than
we thought it would be when we started talking about it,
But we wonder looking at some of the pressures out
there in the economy. You look at the likes of
important inflation fears, the fact that the New Zealand dollar
is down quite a bit against the US over the
last couple of months, the fact that in the latest

(02:39):
A and Z Business Outlook survey there were a higher
proportion of businesses saying they expect to get higher cost
increases in the next couple of months. None of that's
sort of good for longer term inflationary trends. So we
actually wonder if, yep, the Reserve Bank goes by fifty
in February, but they might well signal that there's not
quite as many cuts left in the town after that. End.

(03:01):
Of course, we've seen retail banks the last couple of
weeks cutting their interest rates back quite a bit, and
so it wouldn't surprise us if you saw the Reserve
Bank cut the official cash rate, but maybe not quite
as many cuts to retail rates because the banks have
already priced some of them in. Now, that's not to
say that the economy won't continue to get better, but
there is just that open question of sort of, you know,

(03:21):
are we where are we trying to get to. Are
we trying to get back to sort of a more
normal level of growth, sort of not stellar, or are
we able to supercharge it ahead. At the moment, we're
still worried that, you know, we get growth back to
just sort of plodding along. And I think everyone's quite
clear they'd like to see more than that.

Speaker 1 (03:37):
What's your take on what is good news from Westpac
today predicting that those dairy prices will stay above ten
dollars this year. What's your take on that?

Speaker 2 (03:45):
Oh, look very encouraging and I think you know, we've
been expecting for a couple of months now that a
lot of the economic recovery that we're starting to come through. Yep,
it'll be driven by households, but at the same time,
those rural and provincial parts of New Zealand really are
starting to get a little bit more momentum showing through.
I've spent the last couple of days traveling around parts
of South Island, through the West Coast and Canterbury, and

(04:08):
there's certainly been a little bit more activity than I
feel like I saw towards the end of last year,
certainly the middle of twenty twenty four, and that just
suggests it's a little bit more confident starting to come through.
The difficulty is, you know, we're not seeing the economy
absolutely rip roaring, like no one's saying that, but equally
we're not in the same doldrums. I think that we
were going back a year ago and trying to find

(04:29):
that new economic goldilock zone is going to be important,
and I think we're starting to get a little bit
more clarity on where that might be. It's better, but
it's not fantastic and just hell raising all of a sudden,
all that quickly.

Speaker 1 (04:40):
Brad, thank you very much for that. Brad Olson Informentiate
Principal economist off quoted by the Prime Minister. For more
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