Kelly Eckhold: Westpac Chief Economist on GDP data

0:00GDP today, quarter four, that's three months to December, obviously. Most economists expected to land around 0.3.4%, the Reserve Bank was expecting 0.5%, Kelly Eckold Westpank Chief Economist Kelly. Good morning. Good morning. If it lands where you think it will, which is 0.4, it has significant is that what does it mean for us? Well, it's actually a bit dated now, isn't it? I mean, we're talking about what happened in the fourth quarter of last year. It will be encouraging that we will have recorded a second consecutive, decent quarter of growth, but we're all looking forward to see how this Arab war is going to influence growth sort of through the middle of this year now, and obviously that's where the fog of war is such that it's hard to know. Yeah, obviously that's back with looking, and you've revised down your forecast, I think 2.8% down from 3.3% for the year, which still doesn't sound like defeat to me, Kelly. How much of this comes down to sentiment and confidence? You know, when we had the Liberation Day last year, and businesses, you know, tighten, consumers tightened,

1:04how much of this comes down to how confident we feel going into it? Well, I think it does matter in terms of the size of the impacts, but there are some actual real economic dislocations occurring out there at the global economy now, because the oil isn't flowing, the fuel isn't flowing, and economies depend on that. I think it's certainly true that if the confidence and the consumers in the business sector plunges relatively hard, then we'll get an earlier and larger impact on the economy. I have optimism that given we've still got very strong commodity prices, the exchange rates helping us out here, and also we've got quite low interest rates that we're very well placed, I think, to weather it compared to what we could have been. Hard to disagree with that. So, what about overnight, I see the oil has gone up again, $100,000 a barrel, gas fields being hit, and then there's the fear that more oil fields will be hit as a result. Does that worry you, or is this just it's up and down at the moment?

2:10No, I mean, this continues to worry me, because I think what the markets are gradually working up here is that it's a long road back to resolution of this issue. Iran can probably expend relatively little effort to cause quite a lot of damage, and until that straights or moves opens up, then nobody's going to be eating their taco.