A combination of inflation, labour shortages and rising interest rates will cause the Canadian economy to contract in 2023, RBC Economics’s Nathan Janzen and Claire Fan said. Household spending will decline after a pandemic-driven boom, and economic trouble abroad, including in the U.S., will affect Canada. (The Logic)
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A combination of inflation, labour shortages and rising interest rates will cause the Canadian economy to contract in 2023, RBC Economics’s Nathan Janzen and Claire Fan said. Household spending will decline after a pandemic-driven boom, and economic trouble abroad, including in the U.S., will affect Canada. (The Logic)
Talking point: As predictions of recessions go, this one is low on alarm. The bank didn’t put a number on the economic shrinkage it forecasts, though it did estimate an unemployment rate of 6.6 per cent, up from the record-low 5.1 per cent in the most recent Labour Force Survey. Higher interest rates are simply needed to get inflation under control, in RBC’s analysis, and once that’s done, the Bank of Canada can lower them again, ending some of the pain they cause. “We don’t think it’ll take long to unwind that weakness in 2024 and beyond,” their report concluded. The Bank of Canada is to deliver its next interest rate update on July 13.
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