Last week, Bank of New Zealand warned that “things could well and truly turn to custard” as the global economy is plunged into recession:We can’t stress enough our fear that the rapidity of rate increases globally, coupled with the disastrous consequences of Europe/UK’s energy crisis, means things could well and truly turn to custard. Thus, the prospect of a sharp fall in consumption spending on the back of rising mortgage rates and falling housing prices raises the clear and present risk that the economy will be plunged into recession if the Reserve Bank continues hiking aggressively. This will add to the consumption shock facing the economy as household disposable income is squeezed even harder. A global recession looks certain for next year on the back of central banks’ uber aggressive monetary tightening and rising energy costs. If the Reserve Bank is not careful, and tightens much further, it too will plunge New Zealand into a consumer-led recession.

Source: New Zealand Herald October 03, 2022 22:46 UTC