The OECD has downgraded its outlook for the global economy as a result of President Trump's escalating trade wars.
Canada and Mexico are predicted to see the biggest impact, with Canada's growth outlook being halved and Mexico being expected to see a recession.
HSBC chief economist Paul Bloxham explains further.
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Speaker 1 (00:00):
Crayon Bridge.
Speaker 2 (00:01):
The OCD has revised down its expectations for the global economy.
This is thanks to Trump's tariff trade three t's get
it out, Ryan. Trump's trade tariffs. Canada and Mexico are
forecast to see the biggest impact Canada's growth that outlook
has been halved, Mexico's expected to plunge into a recession.
(00:23):
The US is also expected to take a hit. Paul Bloxham,
is HSBC's chief economisties with US now Hi Paul good eight.
So what do you make of this OECD analysis as
a stack up.
Speaker 3 (00:36):
Well, the idea that it's downside risk for global growth
lifting trade tariffs and the trade tensions that are out
there is certainly makes sense. And the way they've calibrated
that in terms of their forecasts is to lower their
forecast the most for countries that have seen the biggest changes,
so Canada Mexico.
Speaker 1 (00:53):
These are two.
Speaker 3 (00:54):
Countries where there have already been tariffs announced and there
are more in train. So it makes dents that they've
revised down their global growth story on the back of
the policy changes we've seen.
Speaker 2 (01:06):
We could see further revision down right, because I mean
we haven't even got to April second yet, which is
when the President will will formally sort of announce what
he's doing with all tariffs.
Speaker 3 (01:17):
Well, that's right, we're only part way through the process.
We've seen a whole lot of action already most but
there is still more to come, as you say, So
they're flagging, the administration has been flagging that on the
first of April there'll be more a larger collection of
possible changes to trade policy from the US. And in
that basket of things that they're talking about, they're talking
(01:38):
about the idea of potentially using.
Speaker 1 (01:40):
What are called reciprocal tariffs. So the idea is that
you look.
Speaker 3 (01:43):
At how every other country's got its trade policy set
with the US, and then potentially the US matches that.
So that would be a large set of changes that
would potentially come into play. But there are other things
in the works as well, it certainly, and so watching
out for what happens on the first and second of
April is certainly important.
Speaker 2 (02:03):
Australias also speak to take ahead on these OCD numbers
by how.
Speaker 3 (02:07):
Much not very much for twenty twenty five, although they
have revised down their growth forecast for twenty six. I
mean I think Australia is less in the firing line
in the scheme of things, because I think most of
Australia's will. Australia's trade share with the US is actually
not that large, so only four point six percent of
(02:28):
Australia's exports go to the US directly. But the bigger
effect on Australia is potentially going to come through the
impact that any of these sorts of policy changes has
on Australia's trading partners, mostly in Asia, and of course
what that means for growth in China and the Asian
economies more generally, and they are obviously becoming subject to
some of these policy these policy shifts. The thing I
(02:49):
think that's worth keeping in mind, though, as we saw
yesterday and over the weekend, is that the Chinese policymakers
are also very well aware of this, and they've already
started to take action to support China's growth in the
face of right the ratcheting up trade policy tensions. They've
announced this thirty point plan to support the consumer, and
(03:10):
as a result of that, I think that's going to
provide support for China's growth, so that would be a
positive or an offsetting effect for Australia and for New
Zealand as well.
Speaker 2 (03:19):
Yeah, I was going to ask you about China because
you've obviously we had those numbers out for January February
showing their exports were well, not as much as they
would have liked. Their imports were down I think eight
percent for that month. But then, as you say you've
got the stimulus, you've also got the retail sales data
out which was slightly better than expected. How's China looking
(03:40):
to you?
Speaker 3 (03:41):
Well, so the broad sweep of numbers we got yesterday
were a bit better on average than was expected. So
across the production numbers, the retail figures, the investment numbers,
they were all a bit better than expected. But the
main thing is we've also seen stronger policy support announced
in this form of this Special Action Plan to boost
consumption as the Chinese referred to it. And it's a
big plan with a lot of different measures, mainly aimed
(04:03):
at trying to lift household incomes. And as a result
of that, HSBC has actually we've revised up our growth
forecast for China for twenty twenty five. We now think
growth will be four point eight percent. We previously thought
it would be four and a half. So we're taking
action with our own forecasts on the back of the
fact that the policymakers are stepping up and providing more
more stimulus, and that's what's important. I think that's the
(04:24):
fundamental thing that's important for Australia and New Zealand.
Speaker 1 (04:27):
We are more tied to.
Speaker 3 (04:28):
The Asia story and the China story than we are
to what happens directly out out of the US, and
so if there are policy measures like this delivered, which
is what we're getting, that's going to be positive a
support for Australia.
Speaker 1 (04:42):
And New Zealand's trade with China. So that's a big
offsetting feature.
Speaker 2 (04:45):
Yeah, thank you to the CCP. Now the New Zealand
GDP figure, this is four quarter to four last year,
is out this Thursday. Most people saying we'll recover.
Speaker 1 (04:56):
Yep, we've got that in mind as well. We've got
a consensus.
Speaker 3 (04:58):
Actually we're in line with consensus with a point four
percentage point a percent rise in the quarter Q on Q. Now,
the year on year number would still be falling quite
strongly on the back of that, but I do think
that you're in the beginnings and we talked about this
when we spoke last time. We're in the beginnings of
an upswing in New Zealand, and I think there are
two key tailwinds that are really going to help you out.
(05:19):
The first one is that interest rates are coming down,
and they've come down a lot already and they'll probably
come down further yet. So you've given there's been one
hundred and seventy five basis points of easing already and
we think there's probably three more cuts to come.
Speaker 1 (05:30):
So that's a lot of monetary policy easing to support
the domestic economy.
Speaker 3 (05:34):
And the other tailwind is that dairy prices and meat
prices are high and that's giving you a tailwind from
the terms of trade, boosting national income. So that combination
we think will lift growth more this year.
Speaker 1 (05:45):
And the Q four.
Speaker 3 (05:46):
Print which we get this week is the beginnings of
that upswing led by the consumer.
Speaker 1 (05:51):
That's what we're expecting.
Speaker 2 (05:52):
Long mate, continue, Paul, Thank you very much for that.
Paul Bloxham, HSBC Chief Economists.
Speaker 3 (05:57):
For more from Hither Duplessy Allen Drive and Live to
News Talks, it'd be from four pm weekdays, or follow
the podcast on iHeartRadio.
Crayon Bridge.
Speaker 2 (00:01):
The OCD has revised down its expectations for the global economy.
This is thanks to Trump's tariff trade three t's get
it out, Ryan. Trump's trade tariffs. Canada and Mexico are
forecast to see the biggest impact Canada's growth that outlook
has been halved, Mexico's expected to plunge into a recession.
(00:23):
The US is also expected to take a hit. Paul Bloxham,
is HSBC's chief economisties with US now Hi Paul good eight.
So what do you make of this OECD analysis as
a stack up.
Speaker 3 (00:36):
Well, the idea that it's downside risk for global growth
lifting trade tariffs and the trade tensions that are out
there is certainly makes sense. And the way they've calibrated
that in terms of their forecasts is to lower their
forecast the most for countries that have seen the biggest changes,
so Canada Mexico.
Speaker 1 (00:53):
These are two.
Speaker 3 (00:54):
Countries where there have already been tariffs announced and there
are more in train. So it makes dents that they've
revised down their global growth story on the back of
the policy changes we've seen.
Speaker 2 (01:06):
We could see further revision down right, because I mean
we haven't even got to April second yet, which is
when the President will will formally sort of announce what
he's doing with all tariffs.
Speaker 3 (01:17):
Well, that's right, we're only part way through the process.
We've seen a whole lot of action already most but
there is still more to come, as you say, So
they're flagging, the administration has been flagging that on the
first of April there'll be more a larger collection of
possible changes to trade policy from the US. And in
that basket of things that they're talking about, they're talking
(01:38):
about the idea of potentially using.
Speaker 1 (01:40):
What are called reciprocal tariffs. So the idea is that
you look.
Speaker 3 (01:43):
At how every other country's got its trade policy set
with the US, and then potentially the US matches that.
So that would be a large set of changes that
would potentially come into play. But there are other things
in the works as well, it certainly, and so watching
out for what happens on the first and second of
April is certainly important.
Speaker 2 (02:03):
Australias also speak to take ahead on these OCD numbers
by how.
Speaker 3 (02:07):
Much not very much for twenty twenty five, although they
have revised down their growth forecast for twenty six. I
mean I think Australia is less in the firing line
in the scheme of things, because I think most of
Australia's will. Australia's trade share with the US is actually
not that large, so only four point six percent of
(02:28):
Australia's exports go to the US directly. But the bigger
effect on Australia is potentially going to come through the
impact that any of these sorts of policy changes has
on Australia's trading partners, mostly in Asia, and of course
what that means for growth in China and the Asian
economies more generally, and they are obviously becoming subject to
some of these policy these policy shifts. The thing I
(02:49):
think that's worth keeping in mind, though, as we saw
yesterday and over the weekend, is that the Chinese policymakers
are also very well aware of this, and they've already
started to take action to support China's growth in the
face of right the ratcheting up trade policy tensions. They've
announced this thirty point plan to support the consumer, and
(03:10):
as a result of that, I think that's going to
provide support for China's growth, so that would be a
positive or an offsetting effect for Australia and for New
Zealand as well.
Speaker 2 (03:19):
Yeah, I was going to ask you about China because
you've obviously we had those numbers out for January February
showing their exports were well, not as much as they
would have liked. Their imports were down I think eight
percent for that month. But then, as you say you've
got the stimulus, you've also got the retail sales data
out which was slightly better than expected. How's China looking
(03:40):
to you?
Speaker 3 (03:41):
Well, so the broad sweep of numbers we got yesterday
were a bit better on average than was expected. So
across the production numbers, the retail figures, the investment numbers,
they were all a bit better than expected. But the
main thing is we've also seen stronger policy support announced
in this form of this Special Action Plan to boost
consumption as the Chinese referred to it. And it's a
big plan with a lot of different measures, mainly aimed
(04:03):
at trying to lift household incomes. And as a result
of that, HSBC has actually we've revised up our growth
forecast for China for twenty twenty five. We now think
growth will be four point eight percent. We previously thought
it would be four and a half. So we're taking
action with our own forecasts on the back of the
fact that the policymakers are stepping up and providing more
more stimulus, and that's what's important. I think that's the
(04:24):
fundamental thing that's important for Australia and New Zealand.
Speaker 1 (04:27):
We are more tied to.
Speaker 3 (04:28):
The Asia story and the China story than we are
to what happens directly out out of the US, and
so if there are policy measures like this delivered, which
is what we're getting, that's going to be positive a
support for Australia.
Speaker 1 (04:42):
And New Zealand's trade with China. So that's a big
offsetting feature.
Speaker 2 (04:45):
Yeah, thank you to the CCP. Now the New Zealand
GDP figure, this is four quarter to four last year,
is out this Thursday. Most people saying we'll recover.
Speaker 1 (04:56):
Yep, we've got that in mind as well. We've got
a consensus.
Speaker 3 (04:58):
Actually we're in line with consensus with a point four
percentage point a percent rise in the quarter Q on Q. Now,
the year on year number would still be falling quite
strongly on the back of that, but I do think
that you're in the beginnings and we talked about this
when we spoke last time. We're in the beginnings of
an upswing in New Zealand, and I think there are
two key tailwinds that are really going to help you out.
(05:19):
The first one is that interest rates are coming down,
and they've come down a lot already and they'll probably
come down further yet. So you've given there's been one
hundred and seventy five basis points of easing already and
we think there's probably three more cuts to come.
Speaker 1 (05:30):
So that's a lot of monetary policy easing to support
the domestic economy.
Speaker 3 (05:34):
And the other tailwind is that dairy prices and meat
prices are high and that's giving you a tailwind from
the terms of trade, boosting national income. So that combination
we think will lift growth more this year.
Speaker 1 (05:45):
And the Q four.
Speaker 3 (05:46):
Print which we get this week is the beginnings of
that upswing led by the consumer.
Speaker 1 (05:51):
That's what we're expecting.
Speaker 2 (05:52):
Long mate, continue, Paul, Thank you very much for that.
Paul Bloxham, HSBC Chief Economists.
Speaker 3 (05:57):
For more from Hither Duplessy Allen Drive and Live to
News Talks, it'd be from four pm weekdays, or follow
the podcast on iHeartRadio.
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