New Zealand's economic growth outlook is looking particularly low for the next couple of years as high inflation, rising interest rates and the war in Ukraine all bite.
In its latest Economic Weekly report, ASB said that it isn't just the post-Omicron surge in traffic that's slowing things down; the pace of the global and New Zealand economy will slow over the next couple of years.
ASB said some growth headwinds are blowing harder, even as the economic impacts of domestic COVID-19 outbreaks are easing.
"We expect NZ growth this year will slow to 2 percent and barely keep its head above 1 percent next year," it said.
"There is no peaceful, easy feeling on the global front. Russia's invasion of Ukraine means high energy prices are putting a hole in the world outlook that will not change in a hurry: the EU and the UK will for some time be weaning themselves off Russian fossil fuels and boosting demand and prices for various forms of non-Russian energy."
Interest rates are soaring in a number of countries, including New Zealand, where inflation is heating after central banks tried to stimulate the economy, ASB said.
"In NZ, it is household spending that is likely to bear the brunt of inflationary and interest rate pressures on spending power, with per capita spending volumes likely to be flat over 2022 and 2023," it said.
On the housing market, ASB said that seemingly out-of-control prices have already given way to steady price declines.
"As our housing guru wrote in his Housing Confidence update, people's price expectations have come crashing down to earth with a thump. Even so, those expectations potentially have a lot further to fall: net price expectations (those expecting a price rise minus those expecting a fall) hit around net -50 percent during the last major housing downturn," it said.
"This Friday we'll get some further signs of how the economy started 2022, with a raft of Q1 information on manufacturing and other business activity. Our current pick for Q1 GDP, out next week, is 0.4 percent quarterly growth - during a time when Omicron was having its peak impact on worker availability and precautionary behaviours."
Although electronic card transactions are likely to dip around 3 percent, following a lift in April when COVID-19 restrictions eased.
The cost of living and higher interest rates are increasingly biting, it added, and card transactions are one of the early warnings to pick up that impact.
Retail sales dropped in the three months to the end of March, signalling that the cost of living crisis is biting.
Stats NZ's latest retail trade survey showed seasonally adjusted sales volumes fell 0.5 percent during this three-month period, compared to an 8.3 percent rise in the December quarter.
Westpac senior economist Satish Ranchhod said the quieter start to 2022 was expected after the jump in December since it came on the back of easing COVID-19 restrictions and the effect of Omicron.