The Canadian Federation of Independent Business predicts Canada's economy will enter a technical recession at the end of 2023 and continue to struggle to grow in the new year.
The CFIB's forecast released Tuesday suggests Canada's economy will contract by 0.2% in the final quarter of 2023. Statistics Canada reported last year that real gross domestic product (GDP) also contracted slightly in the third quarter.
If accurate, two consecutive declines in real GDP would constitute a technical recession.
StatCan's own forecast for the fourth quarter of 2023 will not be released until the end of February, but the latest GDP report suggests that economic growth is likely to be flat at the beginning of the third quarter, before picking up in November. It is shown.
The CFIB forecasts that Canada's economy will recover in the first quarter of this year, with growth of 0.5%.
CFIB Chief Economist and Vice President of Research Simon Gaudle said in a statement on Tuesday that despite forecasts of a weaker economy in the fourth quarter, the situation is a bit more “subtle” than the headline numbers suggest. Stated.
Get financial news and insight delivered to your inbox every Saturday.
He said that while corporate sales and employment continue to show signs of strength, signs of optimism from CFIB members are weak. In particular, the manufacturing industry has become increasingly pessimistic due to the decline in domestic and overseas demand.
Corporate investment plans are also at an all-time low, according to the CFIB survey. The group said small and medium-sized enterprises were less likely to invest in their own businesses under the weight of “general uncertainty, various cost pressures and increased taxes.”
A lack of business investment has been hailed as a weakness in Canada's economy, with experts recently telling Global News that falling spending in Canada is accelerating inflationary pressures and fueling reliance on immigration for economic growth. He said he is doing so.
The CFIB projects that average inflation in 2024 will be 3.1%, lower than in recent years. Consistent with the Bank of Canada's findings, most companies are considering raising prices this year, but fewer than in previous years plan to do so. Last week's survey.
The CFIB's forecast comes a day before the Bank of Canada's first interest rate decision of the year, which is widely expected to keep interest rates unchanged. The central bank is also expected to release its own revised forecasts for inflation and the Canadian economy on Wednesday.
But given the economic slowdown already visible and the “wide-ranging challenges” facing small businesses next year, the CFIB is calling on the Bank of Canada to “seriously consider easing monetary policy starting next spring.” There is.
© 2024 Global News, a division of Corus Entertainment Inc.
