INTERVIEW WITH MS. KATIE DEAN, SENIOR ECONOMIST OF AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ANZ)

“Comment on Today’s Economic Data”

http://www.brr.com.au/event/51887

TUESDAY, SEPTEMBER 30, 2008, 2:30 PM.

            BRR    Today Boardroom Radio welcomes the Senior Economist at ANZ Economics and Market Research, Ms. Katie Dean.

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                        Welcome to Boardroom Radio Katie.

            ANZ     Thank you.

            BRR    Katie, certainly a lot of volatility in the market today and we have seen quite a

15                    few economic steps come out as well and you’ve released a document highlighting that economy was slowing going into latest global turmoil.  What are some of the numbers that have come out today?

            ANZ     That’s right.  We received a range of data on the domestic economy at an 11:30 today including data on retail sales, private sector credit, and also

20                    building approval all for the month of August.  Now, this data does of course pre-date the recent events that we’ve seen over the last couple of weeks which has closed our ravaging markets but what the data does show that is going into the current crisis, the domestic economy here was continuing to slow.  The retail trade data showed that retail sales growth on a year-on-year

25                    basis is continuing to slow.  On a monthly basis, retail sales bounced by 0.6% but this was largely due to an increase in food, so we exclude food, we actually see that retail sales were negative in the month of August.  Unfortunately, building approvals data was also negative for the month of August so further funds at the housing market is weakening.  And then the

30                    private sector credit data was also modest.  We have seen that both households and businesses are scaling back their lending activity.

            BRR    And Katie was risk to global growth deteriorating pre-shop of the recent times.  You believe that the other has no choice but to cut rights next week.

35        ANZ     I think that’s right.  I think that over the last couple of weeks we’ve seen a material turn in the risks around the global economy.  Not only have we seen this very bad news that’s come out of the US but there’s increasing funds that the European banking sectors are also under stress, and of course that the European economy in real terms is also weakening.  Now, unfortunately for

40                    Australia what has really turned is the atmospherics surround the Asian regions, so we’ve seen some pretty weak data come out of China and a lot of forecasters are now looking to downgrade their outlook for the Chinese economy.  Now, this does have some pretty negative implications for commodity prices.  Of course, the very strong terms of trade in Australia so,

45                    and the strong rising commodity prices has been an important battle for the Australian economy.  Over the last year or so when we have had a slower growth profile in the US and Europe but now that that stimulus looks like it starting to wane then, clearly the risks to the Australian outlook have deteriorated so we do think that the ABA will have to cut interest rates when they meet next week.

            BRR    Katie, thanks for the update and how can people get more information if they

5                      want to?

            ANZ     Yes.  Well, if there’s people looking for more information then certainly they can have a look on the ANZ website.  We have a range of publications on the economics page there including updates on what’s happening in the market and the broader economy.

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            BRR    That was Katie Dean, Senior Economist at ANZ Economics and Markets Research Department.  If you have any further questions or comments, please visit our website brr.com.au or contact us via the home page. 

                        I’m Terrence Bell.  Thanks for listening to Boardroom Radio.

INTERVIEW CONCLUDED

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