Kelly Eckhold: Westpac Chief Economist ahead of today's GDP figures

Today's GDP figures are expected to show the economy weakened in the second quarter of this year.  

Analysts are forecasting a contraction between 0.1 and 0.5%.  

The first quarter of 2024 showed just 0.2% growth.  

Westpac Chief Economist Kelly Eckhold told Mike Hosking June was the weakest month they've seen in a while.  

He says they expect it to have gone backwards again in Q3, but it will be a finely balanced thing – they're forecasting minus 0.2. 

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Episode Transcript

Speaker 1 (00:00):
Right to the economy. We've heard from the Fed this
morning it is fifty points. Also today our GDP figure
for the second quarter, so that's April May and June.
Consensuss we've gone backwards again. WESTPACX chief economist Kellye holds
back with us Kelly morning to you morning. Your numbers.

Speaker 2 (00:14):
What we've got minus point four for the quarter and
minus point six for the year.

Speaker 1 (00:20):
Okay, did you have fifty on the Fed?

Speaker 2 (00:23):
We did not have fifty on the Fed. We had
twenty five. But there have been a lot of smoke
forming from the newspaper articles on the weekend suggesting it
was going to be a finally balanced decision. Oh god,
it certainly looks like the Fed's moved the gold posts.

Speaker 1 (00:37):
Exactly do we react to that? Does the Central Bank
look at that and go hold on, we'll need to
rethink here or not?

Speaker 2 (00:44):
Well. I think most central banks in the world will
be looking at this, because the US sets the global
risk through rate. I don't think the Reserve Bank probably
expected that they'd be moving by fifty basis points today,
so they'll be considering that. I mean, if you compare
the economic indo cater is between new Zealand and the US.
It looks unequivocally stronger in the United States.

Speaker 1 (01:05):
So point four today, if you are right, Can we
then mount an argument that says, if it's point four
in Q two, it's probably something similar in Q three.
At the very least, it's backwards. Therefore it's a recession.

Speaker 2 (01:17):
Oh, I think that we do expect that it'll go
backwards again in Q three, although it's going to be
a finely balanced thing. We've got minus point two for
the quarter in September, and there might even be a
bit of upside risk for that. We definitely think though
that Q two was the trough in this cycle, and
particularly in June. Look what it looks like. It was
the weakest month we've seen in quite a while.

Speaker 1 (01:40):
Okay, So that partially answers my next question, because what
we are starting to see semantic don'tal stuff your confidence,
run services, business, consumers, et cetera. Is that real in
your view or is it hope born of desperation.

Speaker 2 (01:53):
Well, there's a mixture of both, But if there's a
higher weight on hope right now, because we're quite early
in the easing cycle, we've only had the one twenty
five point cup. But I think the thing that businesses
in particular are really reacting to is that longer term
intistraits have formed a lot, so they've really got the
ability to access finance at a much cheaper level than

(02:14):
they have done for a good few years.

Speaker 1 (02:16):
So surviving till twenty five is real.

Speaker 2 (02:19):
Well, I think that is real, and I think probably
with a bit more optimism than they've had probably for
most of the last six months or so.

Speaker 1 (02:26):
Good stuff, You have a good day, and we'll talk
again soon, Kelly E. Cold, Westpac Chief Economist. He says
minus zero point four. For more from the Mic Asking Breakfast,
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