Vittoria Shortt: ASB CEO on the impact of global trade barriers on New Zealand's economy

Increased global trade barriers —like Donald Trump's tariffs— are continuing to slow down New Zealand's economic recovery. 

Infometrics is drastically reducing its GDP growth forecast from 2.6% to just 1%. 

Many economists now expect the Reserve Bank to go harder for longer with OCR cuts, despite a likely rise in inflation. 

ASB Chief Executive Vittoria Shortt told Mike Hosking many businesses don't know how they'll be affected by the global uncertainty. 

He says confidence had started to reappear but is now dampening as things start going on hold. 

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Episode Transcript

Speaker 1 (00:00):
Husky. So today as we head on, if we haven't
already into the easter break, we'll get our latest inflation
read suggestion being it might be a little bit hotter
than we thought because certain things are going on in
the economy. So what figure are we expecting? What's to
tell us about the recovery moving forward? Asb ceo vertrria
short as with us Victoria, good morning to you, good morning,
and I am ailing to test you outside your wheelhouse.

(00:20):
But we're feeling fragile envioent, you know at the moment,
a little bit fragile.

Speaker 2 (00:25):
Well, I mean, I think at the moment, we're certainly
waking up and each day a day feels like there's
something new. And the only certainty right now is that
this volatility is set to continue for a little while.
And that's certainly what we're hearing from our customers.

Speaker 1 (00:37):
Infometrics this morning have suggested all of whats going on
in the world could knock one point four percent off
our GDP, in other words, from two point four percent
down to one. What does that mean for the country?

Speaker 2 (00:49):
Do you think? Yeah, look, I think if I just
kind of step it through our by the way, our
fodis are a little lower than that in terms of
the impact on GDP, although you know we would say
that there are it's moving around a lot, right, So
the way that we think about inflation, you know, we're
expecting to see inflation edge up slightly and that will
be driven by tradable goods or things that we import,

(01:12):
but we think that domestic or non tradable will decline.
So net net, we think will still be in the
inflation range. We'll see tack up of that to perhaps
two point four, but then we do still think it's
going to float down towards set mid range on what
that means?

Speaker 1 (01:28):
Yeah, yeah, sorry, what's neutral cash?

Speaker 2 (01:30):
Right, So we're thinking that the ocr could now go
a little lower. Previously we were thinking above three, but
now we think it could be a below three neutral
or a little bit more. Astometory rates that are around
two points in five.

Speaker 1 (01:45):
So how much of this do you think is about
literally what's happening versus what's happening in people's minds and
we're just freaking out of it, and that's got confidence
written all over it.

Speaker 2 (01:55):
Look, I think certainly the business is the business. Generally
confidence had started to reappear, but We're now seeing a
lot of things go on hold, so there is it
is certainly dampening confidence generally. But when you have a
look at some customers in our top ten exporters to
the USO meat, dairy wine as example, they are having

(02:18):
to do some real work to scenario plan out alternative
markets but also where they might benefit as well.

Speaker 1 (02:26):
This mortgage business that's going on at the moment, the
fixed rates are being chopped left, right and center. Does
that drive demand? Are we still looking to borrow as
money going out the door?

Speaker 2 (02:35):
Look, I think where that's really paying through is in
home lending and also just interest rate relief. So this
morning I'm speaking of which this morning we announced another
drop to our rates, so you'll see rates in the
one and eighteen months down below five percent. Now what
that does is it provides a little bit relief, a
little bit of relief so that this inflation does take

(02:56):
up a bit, households should be able to withstand it,
and I think that's important.

Speaker 1 (03:00):
Good stuff, Nice to talk to you, have a good
weekend as well asb CEO victory is short with us
those aforementioned one year at four nine nine, eighteen months
at four nine nine. That's a drop of twenty six
and twenty basis points. For more from the Mic Asking Breakfast,
listen live to News Talks at B from six am weekdays,
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