This was a far cry from Canada's promising economic performance during the first half of 2022, Parliamentary Budget Officer says
It will take more than a year for Canadian economic growth to recover as consumers continue to scale down their spending amid higher borrowing costs and fears over a potential recession, according to Parliamentary Budget Officer Yves Giroux.
“Following a strong performance in the first half, with the tightening of monetary policy, growth in the Canadian economy slowed considerably in the second half of 2022 as consumer spending downshifts and residential investment continues to decline,” Giroux said.
“We project real GDP growth to remain weak through 2023 before rebounding somewhat in 2024.”
Giroux stressed that global forces are playing a major part in these dynamics.
“With the synchronized tightening of monetary policy by major central banks around the world to reduce high inflation, there is a risk of a more severe global slowdown, which would negatively affect the Canadian economy and federal finances.”
However, the PBO said that it is also anticipating the central bank will ease on its hikes once inflation moderation becomes apparent. Giroux is forecasting the BoC benchmark rate will settle at 2.5% by the end of 2024.