Cameron Bagrie: Independent Economist on GDP growth

An economist says the economy has some forward motion. 

Stats NZ data shows a 1.1% GDP increase in the September quarter. 

Independent Economist Cameron Bagrie says he expects to see 2 to 3 percent growth over the next 12 months is likely. 

He told Francesca Rudkin there are other statistics trending in a positive direction. 
 
Bagrie says that includes more hours worked and greater bank lending into the business sector. 

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Episode Transcript

Speaker 1 (00:00):
The economy is rebounded into one point one percent growth
in the September quarter, ahead of forecasts. Economists have been
picking a rise of between point eight and one percent.
Business services, manufacturing, and construction led the recovery. Finally, some
signs of life in the economy. Independent economist Cameron Bagrie
joins me. Now, good morning, Cameron, thanks for your time.

Speaker 2 (00:21):
Not good morning from comors.

Speaker 1 (00:22):
Okay, is it too early to celebrate?

Speaker 2 (00:27):
Oh, this economy's got forward propulsion. If you ever look
at the second quarter number, what I've got revised down
to minus one percent, we're center plus one point one
in September quarter. Do I think those two quarters, that
down and the up were a fair reflection of the economy.
The answer is no. I think there's a little bit
of underlying noise across the flat overall was probably about right.

(00:50):
But if you look at most of the indicators, lo,
your GDP obviously ours were concrete pored you look at
bank lending into the business sector in the month of Octiger. Yeah,
there's a there's a pretty deep array of green shoots
there that are starting to shelves a pretty consistent story.
We've got forward propulsion. Are we knocking the ball out
of the park as a one point one quarterly rise

(01:11):
would imply the answer is no, But we be back
on the positive side of the leisure, which is the
one thing.

Speaker 1 (01:16):
We want do we Why have the previous quarters and
compared to this quarter, why have they been kind of
up and down? What's been contributing to that?

Speaker 2 (01:25):
Well, you can have a look at some yet one
off such as your messinex shutting down production. I think
Statistics zone has got a little bit of noise going
on with their what's called seasonal factors, your pre cod
verse post COVID. You've seen different changes and behavior which
is knocked around some of the balancing items as well. Yeah,
so sometimes when you see that sort of noise within
economic data, you just need to step back sometimes and

(01:47):
take a little bit of deep breath. And I think
there's a bit of an overreaction towards the negative number.
It's going to little be a little bit of overreaction
in regard to hype towards the positive number. But your
net on net, the economy is definitely moving forward.

Speaker 1 (01:59):
Do you think that's going to held down now? Do
you think we can expect more steady GDP results going forward.

Speaker 2 (02:05):
I wouldn't say we've got to expect steady GDP results
that are going forward. It's still like a two steps forward,
one step back economy. We've got massive cycical col wins.
If you look at the farming sector. The farming sector
has done pretty well in regard to the combination of commodity prices,
low U seal on dollar, but the heat's starting to
come out of those dairy prices, so we're keeping a

(02:25):
close eye on that. For twenty twenty six, you got
the Fontpira injection of about two point one billion into
the economy. You've got the rolling impact of lower interest rates,
You've got investment boost. Yes, there's an awful lot of
cyclical support. What we've also got is some pretty massive
structural headwinds, and one of the big ones it's just
your energy prices, the d industrialization of New Zealand as

(02:48):
we respond to high gas prices. We've got still continued
weak productivity growth. Here's still a little bit of nervous
us out there towards the property market. Your people are
cleaning up balance. It's yes, cypical support, there's still a
whole lot of structural factors that we need to get
on top of. Before you called it, what there is
a stay in growth, period of consistency.

Speaker 1 (03:07):
Now it feels like we've sort of peaked a look
around the corner as opposed to heating sort of into
a booming recovery, doesn't it.

Speaker 2 (03:16):
Yeah, Well, this recovery, I don't think it's going to
be like your normal what's called cycrocal recovery, which is
normally of the VPA. Right, you go down pretty hard
and then you come back up pretty aggressive the other side,
as monetary policy works at magic on the intrasensitive parts
of the economy, Construction, residential, property, retailing trivially respond and
a pretty aggressive fection factor. Yeah, because we've got those

(03:39):
structural headwinds, and the property market is still about double
evaluation it was in two thousands. So property prices have
come down, but property prices are not cheap what they
were twenty to thirty years ago. Yes, you've got these
structural constraints on the magnitude of this economic upsweating that
people are penciling in. Are we going to see it

(03:59):
up swing? Yes? Is it going to be a four
to five percent growth up swing which you've seen historically
when you hit the wall, which we did hit the wall. Yeah,
the answer is no. Now, I think expectations a sort
of two to three percent growth in the next door
to twelve months are are pretty reasonable.

Speaker 1 (04:13):
Cameron, as always, really appreciate your thoughts. Have a lovely Christmas.
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