You're listening to a share these podcast, I'm interested.
We mentioned the uncertainty that's been created in the world by the US presidential election. People trying to work out what's going on there. I mean, I know it's MAGA is the acronym, but it's almost like vuka volatile uncertain
complex and always forget ambiguous. As the last one. Is that a pretty fair depiction of how investors are looking at what that election means for the prospects of growth and where rates and where exchange rates and things are going to go, and how that could affect our economy.
Yeah, I mean the investors are scrambling around trying to figure out exactly what this means. Now. Clearly with the cryptocurrencies a rally doe very strongly. I mean, are just purely a speculative, as said anyway, But the speculation is that President Trump has been saying some nice things about it, and Elon Musk is in there, and he's got his doge coin I think it is if it still exists, and the department that he's heading there has got the same dog acronym. There are a first letters, so people
are looking at that asset. There's a feeling that maybe inflation in the United States is going to be higher than would otherwise be the case because of the tariffs which are going on materials goods going into America. Already, firms in Australia are holding pre tariff increased sales by now before the price goes up for goods coming in
from Mexico, from Canada, China, et cetera. Of course, what we don't know is how much of all of these threats for tariff changes are really just bargaining positions to get something else in exchange, either better trade access or something of relevance in the geopolitical sphere, for instance. We cannot know, and so this is going to be an environment of high uncertainty for the next two four years,
et cetera. For New Zealand, the risks lie a bit on the downside here because we export minimally processed commodities to the rest of the world. A lot of the rest of the world has strong farm lobby groups who would like our stuff not to be going in there. And if we're looking at a world reverting more towards mercantilist policies of tariffs to somehow protect your domestic producers, manufacturers, farmers, et cetera. We do risk getting a bit lost in
the wash there and having some negative outcomes. So the environment for ourselves has become riskier over for the next four years, and that may just constrain some investment in New Zealand in this period of time. The intrast rate implications difficult to figure out, but I'd say interest rates again not going as low as people are thinking because of some enhancement of the inflation risk.
If we were trying to wrap it all up for how to make the best out of twenty twenty five, Tony.
I think people anticipate some recovery in the economy, the labor markets improving. You asked earlier on Garth about the unemployment rate. You know, we're four point eight percent at the moment, go to five point five percent. I guess I'm not greatly concerned about that. We had six point seven percent back in about twenty twelve. I think eleven point one percent or so back in about nineteen ninety two. You know, we've seen far higher unemployment rates in the past.
That will act as a constraint on the strength of recovery and consumers spending for a lot of twenty twenty five, so I think there's more rationalization to come in the retail hospitality sector. And because we're in sort of the last stages of the weakness for the economy, that doesn't mean things improve for businesses generally. As we see that the failures liquidations are picking up because some firms do not have the cash flow for the final three to
six months of the period of weakness. It might the ird demanding tax payments, etc. We will see further weeding out across all sectors, but the scene is being set for better activity in our economy, mainly the second half of twenty twenty five and twenty twenty six rather than the first half of twenty twenty five. Conversely, for the biggest parts of the falls and interest rates, that'll be done and dusted, I think, quite frankly by the middle
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