Prime Minister Jacinda Ardern said a grim warning from the International Monetary Fund to Apec leaders that most countries would either be in recession or feel as if they were was “a cause for concern, but not a surprise”.
Ardern left Bangkok on Saturday night to return to New Zealand, saying it had been an instructive Apec summit, including a briefing from Kristalina Georgieva, the managing director of the International Monetary Fund.
Ardern said some of the projections Georgieva set out were “a cause for concern.
“There is a reasonable chance we could see growth that is as low as 2 per cent and for those countries that don’t experience recession technically, it will feel like recession.
No one could work out where all the inflation went after central banks printed trillions in quantitive easing to avoid a global recession in 2008.
What has become apparent from Covid is that inflation was absorbed by global free market just-in-time supply chains that stretched from the shop to the deepest darkest most de-unionised workforces China has.
It’s interesting to note that inflation began ticking up as Apple was forced to put up suicide nets in China to catch desperate workers attempting to kill themselves. It was the terrible work conditions in China that forced basic standards which started eroding the profitability of free market exploitation.
With China shut thanks to their zero tolerance Civid policy and ratcheting geopolitical tensions, the West are having to pull their supply chains back into the West and import inflation with it.
These dynamics aren’t ending.
Russia’s invasion of the Ukraine, the interruption of the agricultural calendar thanks to climate change and the need to rapidly move to a decarbonised and post growth economy are all contributing to the economic doom and gloom as central banks are again forced to push interest rates up to tame inflation.
This in turn risks setting off an event horizon of debt imploding and becoming a huge economic black hole.
The Reserve Bank will consider what will be the next rate hike before they go on their Summer holidays and because it will be a good few months before the next direction statement, they could surprise the market with a full 100 point rise to stamp down on inflation while they are away.
My guess is that we will see a lot of businesses viewing Christmas as their make or break moment. If they don’t see an influx of spending, some won’t be back in January.
Our danger moment occurs economically when unemployment starts rising as inflation continues.
That will be when Kiwis feel like it’s a recession.
The question is who will voters turn to, a Government who has experience at handling a crisis or the untested National and ACT?
Will Kiwis really want the extreme conflict policies of National/ACT at a time when they themselves will be worried?
Will Jacinda and Grant protect you or will Luxon and David protect you?
That’s what voters will be asking themselves as the economic conditions get worse.
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NZ voters or people with NZ voting rights? *crickets chirping*
Labour did a good job with the covid crisis but seem to be sadly lacking in any other area and will get little help from their backers the union as they will rightly be fighting for their members who are now a bigger portion of the work force due to Labou
National have a pool of people from the real business world that can make hard calls and weigh up a situation from experience .and come up with solutions . National did a great job in the last financial crisis and I would back them in the coming one.
Trevor, I think you may be overstating the impact of the GFC on NZ. In reality thanks to having some sanity in our banking regulations here (and in Australia) it was not as severe as in some countries.
That said however who are all these National folks that have all the great ideas? Most, if not all are long gone. Luxon? Please. Assuming its NAT ACT and Seymour is the finance minister, what actual job has he had?
so trev, the business world was well behind brexshit and that turned out well….what lesson do you need to understand business acts in businesses interests not the nations?
Yes Trevor rock star economy but at what cost.
The least terrible option isn’t going to wash. The crises we are facing is the *reason* Labour can’t continue to play this game.
The game’s up.
Bridge Lynch Mutch Mackay Hosking Du Plessis Allan Soper Hawksby and Watkins will be telling as the Government is Fault. But here is a saying 26 Million for a Flag Referdum no one wanted cheap for Knighthood.
Crikey, you’re cheerful today Bomber!
It’s a recession coming that’s all. They happen from time to time. Some people will suffer and some won’t.
That’s life, you should be used to it by now.
For the record, I’m one of the former but that’s just how it goes. Things will get better, in time.
Well it is a manufactured recession.
“The Reserve Bank’s decision to engineer a recession should also put a full stop on any suggestion the Governor was too close to the Government and his Finance Minister Grant Robertson. The central bank just made it more difficult for the Labour Government to win a third term.”