Canada likely to avoid recession, begin recovering later in 2024: Deloitte
Global News
Canada looks set to dodge a recession despite the ongoing downward pressure from higher interest rates, Deloitte Canada said in its economic outlook report.
Canada looks set to dodge a recession despite the ongoing downward pressure from higher interest rates, Deloitte Canada said in its economic outlook report.
A number of worrisome trends are still weighing on the economy, Deloitte said, including sticky inflation, rising business insolvencies and increasing mortgage delinquencies.
“Against this backdrop, we remain cautious about the near-term outlook,” the firm said in its report.
“But based on its current trajectory, Canada appears likely to skirt a recession and even seems poised to begin recovering from its current slump in the second half of this year.”
In an effort to fight breakneck inflation, the Bank of Canada raised the country’s key interest rate from near zero in March 2022 to the current five per cent with a series of hikes.
Inflation has cooled significantly since then, and Deloitte says the central bank is poised to start cutting interest rates in June. Most economists are expecting cuts to begin in either June or July.
Despite these positive signs, Canada’s economy is likely to remain “stuck in neutral” in 2024, Deloitte said, particularly in the first half of the year, with real GDP growth coming in at around one per cent this year before reaching 2.9 per cent in 2025.
Some of the assumptions underpinning Deloitte’s forecasts include robust GDP growth in the U.S., a continued softening of inflationary pressures, cuts from the Bank of Canada and a steady flow of newcomers to the country, supporting demand.
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