Dawn Chorus: 2023 starts with a soft landing

TLDR: Morena and hello again for 2023, which begins with growing hopes in financial markets for a soft landing for the global economy, although a slowdown in inflation in Aotearoa and a fall in mortgage rates here may happen too late to save the Labour Government before the election, which is likely to take place in November.

Wholesale interest rates have fallen in the first two weeks of the year after US and European inflation figures slowed again. There are growing hopes the global economy could be slowing of its own accord for a shallow recession that doesn’t require central banks to squeeze interest rates much higher. The ‘G’ word — a ‘Goldilocks’ recovery — is being used more often.

Although blue skies were rare in Wellington last year, we did have New Zealand’s warmest year on record. And now it’s a new year, with international students back in force and hopes of a ‘Goldilocks’ recovery rising. Photo: Lynn Grieveson / The Kākā

Elsewhere in the news this morning:

• China has reported almost 60,000 covid deaths from its abrupt reversal of a ‘dynamic covid zero’ policy in December, although commodity markets and economists are hopeful the reopening of factories will boost demand for raw materials and resume deflationary pressure on global goods prices;

• Aotearoa had its warmest year ever in 2022, ramping up debate again about who should pay to transition to net zero carbon emissions and mitigate the effects of climate change; and,

• Our political economy is gearing up for the first big week of the year, with PM Jacinda Ardern due to give her first indications of an election-year Cabinet reshuffle and pick an election date.

Paying subscribers can see more detail below the paywall and hear my analysis in the Dawn Chorus podcast above.

My pick of the links elsewhere this morning