Nick Tuffley: ASB chief economist on what to expect for Quarter 1, stabilisation in interest rates, the primary sector and rising consumer spending

ASB has seen some stabilisation in interest rates, the primary sector and rising consumer spending. 

It comes as it was announced Q4 was higher than expected at 0.7%. 

Q1 ends today, what will the results be? 

ASB chief economist Nick Tuffley talks to Mike Hosking. 

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Episode Transcript

Speaker 1 (00:00):
You data into our economy. ASB see some stabilization driven
by those interest rates the primary sector and some rising
consumers spending. But for the car nuts, we are, according
to ASB, a toyota press as opposed to a Ferrari
four to fifty eight. The aspechief economist Nick Toughley's with us. Nick,
very good morning to you.

Speaker 2 (00:16):
Good morning now.

Speaker 1 (00:17):
Q four zero point seven a little higher than we thought,
a little better than we thought in terms of GDP growth.
What do you think for Q one, which we're just
ending today.

Speaker 2 (00:26):
Yeah, well, we think the payful of slode to bits
down to aboutzero point four percent over the quarters in
the first half of the year and then picked back up.
So some of what drove growth at the end of
last year is a little bit unsustainable. It's hartly been
because we had some very good dairying weather and that
helped the dairy production, and we had a pretty good
tourism season as well, which was very helpful.

Speaker 1 (00:46):
How big is the primary sector and if it fell over,
would we fall over?

Speaker 2 (00:52):
It's making a significant difference. But what we've also got
to remember is is not just primary we're seeing ongo
and recovery and tourism market, particularly the Chinese market, has
started to pick up now and increasingly this year. It's
the sort of slow consumer starting to get into life.
But if we hadn't had a really strong sort of
export performance late last year, we would have had some

(01:14):
pretty flat growth at the end of last year.

Speaker 1 (01:15):
How confident are you in what we see in the
world at the moment, given that what we see in
the world may change tomorrow, if not by lunchtime.

Speaker 2 (01:24):
Well, some of those things like the dairy meat, some
of that tourism we should see that continue to do
reasonably well. What's really going to depend for us is
just how widespread any tariffs are going to be. So
our colleagues at CBA did some good analysis and depending
on the scenarios that we see, if you just get

(01:46):
fairly selective tariffs, it could be for New Zealand just
one or two tenths percent off our GDP, But if
you had, say twenty percent tariff right across the board
on all US imports, and that could hit our GDP
by about three quarters. So it really does depend on
the details that come out. One thing I think for
us to bear in mind, we're pretty small, so we

(02:09):
may go under the radar, and some of our key exports,
things like meat, a lot of it goes into hamburgers,
and just the proportion of what goes into the final
consumer out of New Zealand. Hopefully the wouldn't be too
much of a price impact for them even if we
had things like meat tariff.

Speaker 1 (02:27):
Does that depend on how people react, because I'm just
reading this morning the UK are trying desperately to carve
out some sort of exemption. Assuming they don't. The word
is from Downing Street. They're going to retaliate if the
whole world retaliates and America retaliates on the retaliation is
it all on?

Speaker 2 (02:43):
That does mean that the impacts could be a lot
bigger if you go through and do that. So we'll
have to be thinking through here in New Zealand. How
will some of our actually trading partners slow down? For one,
what will happen with inflation globally? Also what benefits maybe
be because we may find given an example, if Canada's

(03:04):
struggling to sell maple syrup and bacon into the US
and China's struggling to sell evs, we may see a
lot of cheap product coming our way as well, so
all those things to throw into the mix.

Speaker 1 (03:16):
Okay, and this is all predicated. I take it on
the RB moving in April and May and we're done.

Speaker 2 (03:22):
That's what we expect. We'll get two more rate cats.
I think the thing is on the global front, if
things get stickier, you'll see there reserve being here, likely
CAT more. And the other thing also is is that
governments are likely if the impacts of tariff's likely to
be bigger, will also swing in and provide more support
to their economies as well. So we've got those factors.

Speaker 1 (03:42):
The way up to and this pretty is be the
Ferrari four fifty eight.

Speaker 2 (03:46):
To you a car guy, Yes, I have been known
to have the occasional occasional car. But look, productivities are
probably the big difference between those things. One's got certainly
got a lot more horsepower than the other.

Speaker 1 (03:56):
Because the four P fifty eight is the one to have.
But you presumably know that, don't you.

Speaker 2 (04:01):
Yes, good, good, B It's always good.

Speaker 1 (04:04):
This is true. Nice to talk to you, Nick, appreciate.
I knew he knew about cars, Nick Tuffer. You don't
go Ferrari four fifty eight unless you know about cars.
ASB chief economists. For more from the my Casking Breakfast
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