March 2, 2026 • 7 mins
Independent economist comments on the state of the world economy as war breaks out in the Middle East. We talk trade implications, interest and exchange rates, inflation, oil prices, equity markets, consumer demand and time frames for the conflict.
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Speaker 1 (00:00):
Cameron Bagery kicks off the show today. Cameron, as I said,
rapidly changing landscape. War has broken out effectively in the
Middle East. What does it mean for us as a
trading nation? I guess that simple answer is not really
that great.
Speaker 2 (00:15):
Well, it's not great for us, it's not great for
the world. You go back to the nineteen seventies and
you have to look at what happened when we saw
real oil shop, both the first and the second. You
punt over the economy effectively into a recession. Now the
hope is that we're not staring down the barrel of
that sort of affair. If you look at the first
oil shop, you know, oil price is trebled in priced.
(00:38):
The second oil shop they're up seventy percent in price.
You what we've seen the market reaction today. Oil prices
are up sort of five to ten percent. There are
up about fifteen percent from their lows in January, So
that's a little bit more of a of a sit
of movement. But it seems to be the hope across
market at the moment is going to come to a
(00:58):
pretty swift end and things will sut because the market
reaction to date has been reasonably subdued.
Speaker 1 (01:05):
Yeah, well I see, sorry, I had to look a
weeb bit earlier this morning. In fact, just before midday,
Cameron that Brent's crude oil price seventy six dollars. It
was up from about seventy I know it was lower
earlier in the year, but that's hardly rocketing up. The
exchange rates with fifty nine US since there dal Jones
(01:26):
is steady. The NZX is actually up if you go
back for the past five days. So the markets kind
of have the markets fact that in a Trump a
reasonably quick Trump victory here.
Speaker 2 (01:39):
Well that's what looks like. Where the marketers gone for this,
But of course you have is it going to be
done master pretty quickly? Well that's a million dollar question,
and no one sort of knows here if you go back, Yeah,
a lot of these sort of conflicts we've seen sort
of historically. If you go back and ever look at Afghanistan,
if you have a look at what happened in Vietnam INSS,
you thought, was that going to be done and dusted
(02:01):
pretty quickly? Well, we're done and dusted very pretty quickly.
The markets had taken a glass up or view of
the moment but it's going to come to a pretty
swift end. We hope that it is going to be
the case, but if you look at historical experience, historical
experience tells us that some of these conflicts don't come
to a very quick end. Very quickly.
Speaker 1 (02:20):
Well, as you mentioned, Vietnam and Afghanistan are two excellent examples.
Worst case scenario, the straight off moves gets completely blocked up,
nothing gets in or out. That is going to spell
well danger, not only for world crude oil supplies, but
obviously for us. We send a lot of stuff up
there these days.
Speaker 2 (02:41):
Well send to a lot of stuff that we receive
all of stuff. If you look at New Zealand's patrol
them and patrol them related products. Yeah, what we bring
in it's about ten billion books. The petrol is about
three billion dollars of that. But the big thing we
bring in is diesel. We can live without without our
(03:02):
cars for a few days. But if you stop the
transport industry and it's traps in regard to getting things
around the country, you've got major economic problems. And of
course New Zealand's got a pretty strong dependency in regard
to imputed fuel because you've got rid of master and point.
So we're no longer bringing encourage and then making our
own product. We're bringing in the finished product. Where does that
finished product come from? It comes from Career, comes from Singapore.
(03:23):
Where does it come from? It comes from the Middle East,
the Straits of Hamoth. There's another side to this, Jamie,
which don't think people are up to play on, is
that what's going on in the Middle East could have
dramatic impact on the world's food production. In regard to
what's going on, because around half of world production is
reliant on not gygen fertilizer. Whether we get an awful
(03:46):
lot of fertilizer out of because it's gas related, it
comes out of the Middle East. It's not just the
impact on oil markets here that people need to be
awake to in regard to what's going on. It's a
potential impact on the world's food bowl and production costs.
There's fertilizer he carries an impact as well because it's
a function of gas.
Speaker 1 (04:05):
Interestingly, Cameron, I just got a text and from Mike
McIntyre from Jardin who's their derivative, Sky, their milk futures
market Sky, and he's saying ahead of tonight's GDT auction,
the market is looking for some reasonable gains, especially in
skim milk, powder and butter. Personally, I think there'll be
some real scrambling with the processes trying to work out
(04:27):
how to deal with orders that are going to be
at best delayed or possibly canceled. Could Trump's war end
up being good for us?
Speaker 2 (04:37):
Well, that's you if you look at here, I for
go back what I said before, Jamie about your food production.
If you have a look at food production, there's a
function of nitrogen, that's the function of guess. And if
those inputs are skis and that restricts food production in
some parts or some countries around the globe, then economics
(04:59):
one oh one, the supplies restricted prices are going to
go up on the side, and of course you had
us on might be a beneficiary of some of those
price increases.
Speaker 1 (05:07):
On the other thought, this could be history repeating itself.
Remember the Korean War wall boom.
Speaker 2 (05:14):
Yeah, but yeah, those sort of things. If you go
back in history, one under key Vera was weakened. Annie
on is what's called our terms of trade. The terms
of trade is the ratio of export prices to input prices,
and we've seen times where we've been literally sopped there.
When you lock it all prices go up, you're a
(05:34):
major input terms of trade goes down. That's a big
living cost living adjustment that we need to go through.
Other situations where the CEO spikes and locks of wall prices,
they tend to be a very big economic game for
New ZE one. So we're going to be watching those
expoot prices right off of the input prices, which is
large as a function of oil diesel, and seeing where
(05:54):
the net balance EMPTUY comes out in the next three
to four months.
Speaker 1 (05:58):
You're the economist, I'm a failed economist, Cameron, Inflation's number
one enemy? Can I say that of the economy?
Speaker 2 (06:06):
Now we just have the EPSOS secies monitor, which is
the mood of the nation survey car out in the
past forty eight hours. They know the government that a
rabbits on about the economy being the biggest issue out
the here. Well, for the ordinary person in the street,
it's not the economy that it's the biggest evil at
the monment. It's a cost of living. It's putting food
on the table. And I guess that's where if you
(06:27):
step back and think about the bigger picture in regard
to what's going on here globally, your worst case scenario
or some of those bad case scenarios in regard if
you see an oil shop, if you see a food
production sort of flop, you just add more cost inflation
into the system. And were already know that central banks
at the moment have got inflation targets by in marg
to two percent. They've got inflation around three concent. Three
(06:51):
percent is not bad, but it's not two percent. And
the last thing any central bank around the globe wants
to see at the moment is some sort of cost shock,
which is why oil price inflation or food price inflation
could potentially add into the system. If this as a
persistent outcome as opposed to a temporary outcome, would you be.
Speaker 1 (07:10):
Game enough to guess how long this fight, this war
could last. I mean, you're an economists. You're used to
making predictions and getting them wrong. So have a crack Cameron.
Speaker 2 (07:22):
No, hey'es if I but if I sit back and yeah,
if I look at history, history tells us that these
sort of things take a little bit of time to settle.
I saw yesterday Donald Trump was saying this then will
be over in four weeks. Well now he's saying might
not be over in four weeks. History tells us that
do not underestimate the underdog, and they are to the
(07:44):
potential to dig in and make us a long and
more stretched out affair if I suspect than what they goes.
Speaker 1 (07:49):
Cameron Bagri, Independent Economists, Thanks as always for your wisdom
on the country. Really appreciate it. Thanks for your time,
Unt Jenny
Cameron Bagery kicks off the show today. Cameron, as I said,
rapidly changing landscape. War has broken out effectively in the
Middle East. What does it mean for us as a
trading nation? I guess that simple answer is not really
that great.
Speaker 2 (00:15):
Well, it's not great for us, it's not great for
the world. You go back to the nineteen seventies and
you have to look at what happened when we saw
real oil shop, both the first and the second. You
punt over the economy effectively into a recession. Now the
hope is that we're not staring down the barrel of
that sort of affair. If you look at the first
oil shop, you know, oil price is trebled in priced.
(00:38):
The second oil shop they're up seventy percent in price.
You what we've seen the market reaction today. Oil prices
are up sort of five to ten percent. There are
up about fifteen percent from their lows in January, So
that's a little bit more of a of a sit
of movement. But it seems to be the hope across
market at the moment is going to come to a
(00:58):
pretty swift end and things will sut because the market
reaction to date has been reasonably subdued.
Speaker 1 (01:05):
Yeah, well I see, sorry, I had to look a
weeb bit earlier this morning. In fact, just before midday,
Cameron that Brent's crude oil price seventy six dollars. It
was up from about seventy I know it was lower
earlier in the year, but that's hardly rocketing up. The
exchange rates with fifty nine US since there dal Jones
(01:26):
is steady. The NZX is actually up if you go
back for the past five days. So the markets kind
of have the markets fact that in a Trump a
reasonably quick Trump victory here.
Speaker 2 (01:39):
Well that's what looks like. Where the marketers gone for this,
But of course you have is it going to be
done master pretty quickly? Well that's a million dollar question,
and no one sort of knows here if you go back, Yeah,
a lot of these sort of conflicts we've seen sort
of historically. If you go back and ever look at Afghanistan,
if you have a look at what happened in Vietnam INSS,
you thought, was that going to be done and dusted
(02:01):
pretty quickly? Well, we're done and dusted very pretty quickly.
The markets had taken a glass up or view of
the moment but it's going to come to a pretty
swift end. We hope that it is going to be
the case, but if you look at historical experience, historical
experience tells us that some of these conflicts don't come
to a very quick end. Very quickly.
Speaker 1 (02:20):
Well, as you mentioned, Vietnam and Afghanistan are two excellent examples.
Worst case scenario, the straight off moves gets completely blocked up,
nothing gets in or out. That is going to spell
well danger, not only for world crude oil supplies, but
obviously for us. We send a lot of stuff up
there these days.
Speaker 2 (02:41):
Well send to a lot of stuff that we receive
all of stuff. If you look at New Zealand's patrol
them and patrol them related products. Yeah, what we bring
in it's about ten billion books. The petrol is about
three billion dollars of that. But the big thing we
bring in is diesel. We can live without without our
(03:02):
cars for a few days. But if you stop the
transport industry and it's traps in regard to getting things
around the country, you've got major economic problems. And of
course New Zealand's got a pretty strong dependency in regard
to imputed fuel because you've got rid of master and point.
So we're no longer bringing encourage and then making our
own product. We're bringing in the finished product. Where does that
finished product come from? It comes from Career, comes from Singapore.
(03:23):
Where does it come from? It comes from the Middle East,
the Straits of Hamoth. There's another side to this, Jamie,
which don't think people are up to play on, is
that what's going on in the Middle East could have
dramatic impact on the world's food production. In regard to
what's going on, because around half of world production is
reliant on not gygen fertilizer. Whether we get an awful
(03:46):
lot of fertilizer out of because it's gas related, it
comes out of the Middle East. It's not just the
impact on oil markets here that people need to be
awake to in regard to what's going on. It's a
potential impact on the world's food bowl and production costs.
There's fertilizer he carries an impact as well because it's
a function of gas.
Speaker 1 (04:05):
Interestingly, Cameron, I just got a text and from Mike
McIntyre from Jardin who's their derivative, Sky, their milk futures
market Sky, and he's saying ahead of tonight's GDT auction,
the market is looking for some reasonable gains, especially in
skim milk, powder and butter. Personally, I think there'll be
some real scrambling with the processes trying to work out
(04:27):
how to deal with orders that are going to be
at best delayed or possibly canceled. Could Trump's war end
up being good for us?
Speaker 2 (04:37):
Well, that's you if you look at here, I for
go back what I said before, Jamie about your food production.
If you have a look at food production, there's a
function of nitrogen, that's the function of guess. And if
those inputs are skis and that restricts food production in
some parts or some countries around the globe, then economics
(04:59):
one oh one, the supplies restricted prices are going to
go up on the side, and of course you had
us on might be a beneficiary of some of those
price increases.
Speaker 1 (05:07):
On the other thought, this could be history repeating itself.
Remember the Korean War wall boom.
Speaker 2 (05:14):
Yeah, but yeah, those sort of things. If you go
back in history, one under key Vera was weakened. Annie
on is what's called our terms of trade. The terms
of trade is the ratio of export prices to input prices,
and we've seen times where we've been literally sopped there.
When you lock it all prices go up, you're a
(05:34):
major input terms of trade goes down. That's a big
living cost living adjustment that we need to go through.
Other situations where the CEO spikes and locks of wall prices,
they tend to be a very big economic game for
New ZE one. So we're going to be watching those
expoot prices right off of the input prices, which is
large as a function of oil diesel, and seeing where
(05:54):
the net balance EMPTUY comes out in the next three
to four months.
Speaker 1 (05:58):
You're the economist, I'm a failed economist, Cameron, Inflation's number
one enemy? Can I say that of the economy?
Speaker 2 (06:06):
Now we just have the EPSOS secies monitor, which is
the mood of the nation survey car out in the
past forty eight hours. They know the government that a
rabbits on about the economy being the biggest issue out
the here. Well, for the ordinary person in the street,
it's not the economy that it's the biggest evil at
the monment. It's a cost of living. It's putting food
on the table. And I guess that's where if you
(06:27):
step back and think about the bigger picture in regard
to what's going on here globally, your worst case scenario
or some of those bad case scenarios in regard if
you see an oil shop, if you see a food
production sort of flop, you just add more cost inflation
into the system. And were already know that central banks
at the moment have got inflation targets by in marg
to two percent. They've got inflation around three concent. Three
(06:51):
percent is not bad, but it's not two percent. And
the last thing any central bank around the globe wants
to see at the moment is some sort of cost shock,
which is why oil price inflation or food price inflation
could potentially add into the system. If this as a
persistent outcome as opposed to a temporary outcome, would you be.
Speaker 1 (07:10):
Game enough to guess how long this fight, this war
could last. I mean, you're an economists. You're used to
making predictions and getting them wrong. So have a crack Cameron.
Speaker 2 (07:22):
No, hey'es if I but if I sit back and yeah,
if I look at history, history tells us that these
sort of things take a little bit of time to settle.
I saw yesterday Donald Trump was saying this then will
be over in four weeks. Well now he's saying might
not be over in four weeks. History tells us that
do not underestimate the underdog, and they are to the
(07:44):
potential to dig in and make us a long and
more stretched out affair if I suspect than what they goes.
Speaker 1 (07:49):
Cameron Bagri, Independent Economists, Thanks as always for your wisdom
on the country. Really appreciate it. Thanks for your time,
Unt Jenny
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