The World Bank is warning the global economy is on a "razor's edge" with interest rates to curb inflation - the biggest threat to growth.
In Aotearoa, households are being advised to prepare a financial buffer as the world braces for its third recession since 2009.
This comes as summer sales tempt Kiwis, and they don’t appear to be resisting with spending in the first week of 2023 up 1.6% on last year.
However, people might start to think twice after the World Bank slashed its previous projection of 3% growth.
"Global growth will be around 1.7%. This is the lowest growth rate outside of global recessions since the early 1990s," World Bank Chief Economist Ayhan Kose said.
Fuelling the slowdown are rising interest rates, the war in Ukraine and the pandemic - the ripples will be felt across the world.
"What would be useful would be for households and businesses to have a buffer so to have that headroom to withstand any negative shocks," economist Christina Leung said.
The world’s biggest economies are expecting slower growth than forecast six months ago.
The US dropping to half a per cent (2.4% to 0.5%), China fell to 4.3% from 5.2% and the Eurozone is now standing still (1.9% to 0%).
It's a weakening of key markets for New Zealand products, but exporters are still confident.
"Food and Fibre exports are expected to grow over the next 12 months, the forecast is out to about $55 billion in export revenue, and that's a record," Export NZ's Joshua Tan said.
On the domestic front, higher interest rates will bite - when nearly half of all mortgage holders have to refix this year.
"It's a bit like the analogy being used of a wonky hotel shower... you are standing in the shower, waiting for the hot water to come through, and as you're waiting and waiting, you're cranking up the heat, but such that it finally does it scolds you," Leung said.
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