Kim Mundy: ASB Senior Economist ahead of the release of last quarters GDP figures

We'll know later today whether New Zealand was in a technical recession last financial quarter.

Gross Domestic Product figures for the three months to March are released later this morning.

ASB is forecasting a 0.1% rise.

Senior economist Kim Mundy told Mike Hosking that they're not expecting another recession, but neither are they expecting strong growth.

She says they think the second quarter will actually be worse.

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Episode Transcript

Speaker 1 (00:00):
GDP day. As I mentioned this morning, the print four
Q one, What did the economy doing? Jan Fab and March.
Are we're still in recession or not? ASBC new economist
Kim Mundy is back. Well, it's Keiven, very good morning
to you.

Speaker 2 (00:10):
Good morning.

Speaker 1 (00:11):
So you're bullish. Bullish at zero point one of zero
point one is bullish? What are you? Where did you
see the growth?

Speaker 2 (00:18):
Yeah, I mean, we're not expecting it was another recession
in the quarter. That's hardly a strong quarter of growth
at just point one, but we do think it was
sort of spread over both the primary sector, so that's
things like dairy output, forestry, fishing, and then also still

(00:39):
the services sector. So the services sector has been a
part of the economy that's really been outperforming since post
COVID because once those COVID restrictions were lifted, we have
spent a lot of our time and a lot of
our demand has been driven towards those services rather than
the good sort of sector.

Speaker 1 (00:58):
Okay, so let's say you're correct and we've got just
a little bit of growth. What about Q two And
I know we're not out of it yet, but we're
just about out of it. Does Q two improve on
Q one, or if Q one's not that flash, Q
two is going to be no better either.

Speaker 2 (01:10):
Look, we actually think Q two is probably going to
be worse again at this stage looking at the data
that's come out so far. And I think that's the
key thing to keep in mind, is that we are
in a period of really really weak private demand. So
monetary policy is working, a lot of people are pulling
back on their spending that impacts the economy. Data out

(01:31):
so far suggests that's just sort of continued to ramp up,
so to speak. How the market activity has been pretty soft,
so sign so far suggests that Q two could actually
see us slipped back into a bit of a decline.

Speaker 1 (01:44):
So here's my problem ongoing. So what is it that
breaks the cycle? So, whether you're right today on Q
one and Q two, you say, it's as flat as
a pancake, it's ugly as so Adrian comes to the
party in what late this year maybe early next year,
and goes, there's a cut, Maybe there's another cut. Do
we all suddenly wake up and go hellolujah? At that point,
are we in for some hard yards for a sustained

(02:04):
period of time?

Speaker 2 (02:06):
We are in for a pretty tough period of time,
I think. I mean, there will be a bit of
a confidence boost once we do hear from Adrian that Yep,
we've done enough, We've got there. We will start to
ease monetary policy. But the fact that monetary policy takes
time to impact the economy. That works in both directions.
So those of those people on sex mortgages, they have

(02:27):
to wait till their mortgage rolls off before they feel
the impact of those lower interest rates. So it will
be quite a long time before the sort of pressure
starts to ease out of the out of the economy exactly.

Speaker 1 (02:40):
Are you into the survive to twenty five thing or
is that just buzz talk?

Speaker 2 (02:45):
No? I think that's I mean, that is very much
the case. I mean, we're expecting the OCO will start
to be cut in twenty February twenty twenty five. I mean,
certain sectors will feel the impact of that sooner than others,
or anything sort of touching how they market might get
a bit of the boost off the back of that,
because it's very interest rate sensitive. But you know, if
we can get through to early twenty twenty five to

(03:08):
the cup do start to come, then we should start
to get you know, a little bit of a reprieve.
It will just take time for that to really flow
through the entire economy.

Speaker 1 (03:19):
I appreciate your insight. Can go well, have a good day,
Kim Monday, I as we've seen your economics. For more
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