Citi economist Veronica Clark forecasts a soft 2025 for the Canadian economy, with slowing growth and persistent inflation concerns. Scotiabank analyst Mario Saric, however, sees a buying opportunity in apartment REITs despite decelerating rent growth.
Citi economist Veronica Clark is pessimistic about the Canadian economy in 2025, forecasting soft 0.4% GDP growth and an unemployment rate peaking slightly below 8%. She cites persistent inflation pressures, including sticky business price plans and risks to shelter inflation, as reasons for not expecting inflation to fall below 2%. Clark anticipates the Bank of Canada (BoC) will cut policy rates to 2.
25%, the lower end of the estimated neutral range, with a possibility of rates falling below neutral if inflation slows more than projected. Meanwhile, Scotiabank analyst Mario Saric sees a buying opportunity for apartment Real Estate Investment Trusts (REITs) for patient investors. He points to decelerating rent growth in most markets except Edmonton and Ottawa, and rising vacancy rates. However, Saric argues that the 2.2% national vacancy rate remains below the 60-year average and second-lowest in over 20 years. He attributes the rise in vacancy to a 30-year high rental supply growth rather than weak demand. Saric believes stabilizing asking rents and market acceptance of the government's inability to curb population growth will be key to improving sentiment in the sector
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