Dawn Chorus: Recession warnings

TLDR: China’s economy is slumping under the weight of its Covid-zero lockdowns in Shanghai and Beijing, raising fears of recessions in the world’s three largest economies later this year or early next year.

Those fears are driving down longer-term wholesale interest rates, despite all the talk of central banks having to hike short term rates to control inflation. The wholesale rates used to set fixed mortgage rates here have also fallen as much as 100 basis points in the last week.

China reported overnight that retail sales fell 11.1% in April from a year ago. Photo: Nicolas Asfouri/Getty Images

In the news this morning and overnight:

• Westpac NZ doubled its forecast for the fall in house prices to 20% by the end of next year;

• China’s retail sales and industrial output fell sharply in April because of Covid lockdowns, and by much more than economists expected;

• Former Goldman Sachs boss Lloyd Blankfein said the risk of a US recession were now very, very high; and,

• Renault sold its Lada factory in Moscow to Russia’s Government for three euro cents.

Look out below the paywall too for more detail on the fall in interest rates, Westpac’s house price call and the reaction to yesterday’s Emissions Reduction Plan.

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