Signs of economy's weakness now 'undeniable'
and not just because lenders are putting away more money for bad loans, said Jean.
Banks are getting more careful about their spending and job vacancies in finance jobs dipped below their pre-pandemic averages in June, he said.The weak second-quarter GDP left Oxford Economics more convinced that the economy has slipped into a moderate recession that will last until early 2024. They have lowered their growth forecasts for Canada to 0.7 per cent in 2023 and a contraction of -0.5 per cent in 2024.
They also see the unemployment rate climbing as high as 7.2 per cent by mid-2024 as hiring slows and job losses rise. Other forecasters expect less damage. Desjardins sees real GDP at 1.1 per cent for 2023 and flat for 2024 and RBC’s forecast is 1 per cent for 2023 and 0.6 per cent for 2024.The mild recession that Desjardins expects at the turn of the year means that“By next March, we anticipate the Bank of Canada will deem the supply-demand rebalancing process well entrenched enough to warrant some monetary policy relief,” he said.
That means while the recession might not be extremely painful, the recovery could be painfully slow, he said.
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