Brad Olsen: Infometrics Principal Economist predicts what upcoming GDP result says about economy

The soon-to-be-released GDP figures for Q2 will give experts an outline of the state of the economy.

Economists predict the economy will have contracted again, as interest rates took their toll on consumer spending.

Infometrics Principal Economist Brad Olsen outlines his picks for the quarter.

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Episode Transcript

Speaker 1 (00:00):
Now the state of the economy will be revealed on
Thursday when the GDP for Q two is out. It's
widely expected that GDP went backwards again. Brad Olsen is
info Metrics principle economist and with us now ay Brad,
good evening, what do you reckon? What are you picking?

Speaker 2 (00:14):
The Infmetrics pick is a point two percent quarterly fall,
so sort of in the middle of the range by
the Luxford of most of the major forecast. Is everyone
in New Zealand looking like the packing sort of anywhere
between point one and point five percent down. Long story short,
that doesn't sound huge, but it's that continuation of weaker
and weaker economic conditions and we're likely to probably see

(00:37):
that persist for the rest of this year. Of course,
we're wanting to get a bit of a gauge on
how different parts of the economy are going. We know that,
for example, healthcare has still been quite a large growing area.
But we'll be looking at or trying to get a
bit more detail on how households are feeling, if there's
you know, how bad and a sense investment decisions are getting.
So a lot of details that will be picking over

(00:59):
on thirsdy. But again, you know that activity here there
was what three months ago now, so it is very
much in the rearview mirror will be also, I mean
comparing some of those figures with some of the more
recent economic indicators to try and give us a gauge
for how challenging the economy still is and maybe when
we're expecting it to turn around the other way.

Speaker 1 (01:18):
So what we're seeing at the moment, obviously, thank godness,
is all the interest rates coming back, the home loan
lending rates. How long before we actually start to see
this playing a role in GDP?

Speaker 2 (01:30):
Look, I think it's probably another almost six to nine
months away, just because of how long it's going to
take for all of those households to refix onto lower
mortgage rates. I mean, but you're right, it's probably a
little bit quicker than normal economic downturns in a sense
because households have been primed for lower interest rates. And
let's be clear, I feel like the downslide at the

(01:51):
moment in mortgage rates is probably faster than any of
us predicted. You know, I saw another of the major
banks cut their rates today. They're now I think the
one year is sitting it's something like six point two nine,
so things really are starting to move now. Of course,
not every household refixes their mortgage three seconds later, so
it will take a bit of time. And what we're
sort of thinking at the moment is that the next

(02:12):
six to nine months is probably going to be dominated
by fewer job opportunities coming through, further increases to unemployment.
But get through twenty twenty five. As people are refixing
their mortgages, they've got a bit more spare cash, they're
spending a bit more in the economy, there's more jobs
that come forward, and that's when we think that economic
mojo comes back a bit.

Speaker 1 (02:33):
It's good to talk to you, Brad always as thank
you very much, mate, look after yourself. It's Brad alsoon
Infamtric Principal Economist.

Speaker 2 (02:38):
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