Jarrod Kerr: Kiwibank chief economist issues warning after GDP figures unveiled

Kiwibank's chief economist says GDP figures released today show good momentum - but the next report isn't looking as good. 

Stats NZ says our gross domestic product grew a strong 0.8 percent in this year's first quarter.

It's much higher than predicted by the Reserve Bank and Treasury.

Jarrod Kerr says there is less optimism around the quarter ending June. 

"The data that we talked about was for the first quarter - obviously, it pre-dates Trump's tariff announcements, which has thrown a whole lot of uncertainty into the year. And it also predates the recent spike in oil prices." 

LISTEN ABOVE

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
So good economic news for US today. GDP is up
by even more than we thought it would be. The
economy grew zero point eight percent in the first quarter
of the CNL. Unfortunately, most commentators don't think quarter two,
the one we're in right now, will be quite so good.
Jared kurrs Kiwibank's chief economist, Hi Jarrett, Hi, did you
take some heart from this?

Speaker 2 (00:19):
Oh? Look at a good report. It showed we had
a bit of momentum coming into the year. Shows the
primary sector, you know, farmers are doing well. But as
you suggested, just before, it's the second quarter where things
start to unravel.

Speaker 1 (00:33):
Yeah, what about before we go into the second quarter?
What about the fact that we actually thought the first
time it feels like ages saw the capita GDP rising
by zero point five percent. How much heart should we
take from that?

Speaker 2 (00:44):
Yeah, it's good. Like I said, it was a good
report for the first quarter. You know, it's nice to
see parts of the economy growing again. So yeah, look,
we think it's a good report. Yeap.

Speaker 1 (00:57):
Okay, So, as you say, second quarter not looking so flash.
So taking those two things combined, what does this mean
for the next Reserve Bank meeting?

Speaker 2 (01:05):
Yeah? So the data that we talked about was for
the first quarter. Obviously, it predates Trump's tariff announcements, which
have thrown a whole lot of uncertainty into the air,
and it also predates the recent spike on oil prices.
So all of this is having attacks on consumers around
the world and here in New Zealand. You know, food

(01:27):
prices are up, energy prices are up, and now petrol
prices will rise. So that's going to stretch household budgets
even further.

Speaker 1 (01:36):
So what do you think, do we get a cut?

Speaker 2 (01:39):
Oh, we need a cut, we need three. In fact,
the Reserve Bank absolutely, I think that the interest rates
sensitive parts of the economy haven't recovered and they're really struggling,
and we need support. We need an economy running closer
to its capacity. We're well below that at the moment,

(02:02):
and I think it proves that interstrates just haven't, Okay, Jared,
really had an impact.

Speaker 1 (02:07):
I mean, I agree with you on that, but that
is actually not the Reserve Bank's job, right. The Reserve
Bank's job is to deal with inflation. Inflation is creeping
up towards the top of the band. Can they take
that risk?

Speaker 2 (02:16):
So that's a short term thing, so we think inflation
spikes now basically, but over the medium term it's headed
back to two and on our forecast it actually falls
below too. So we're concerned about the medium term and
that is their mandate inflation over the medium term, and
it's falling hither, it's heading south, so I think they

(02:38):
should be a bit more proactive and get they're currently
running again.

Speaker 1 (02:42):
Good stuff, Jered, Always good to talk to you. Thanks mate.
That's Jared Kerr Qewibank chief Economist. For more from Heather
Duplessy Allen Drive, listen live to news Talks it'd be
from four pm weekdays, or follow the podcast on iHeartRadio.