Economic Outlook Canada Q1 2024: Growth Is Set To Continue Slowing

S&P Global Ratings expects the Canadian economy will continue to exhibit slower GDP growth for the rest of this year and next year. After a mild contraction in the second quarter, and with preliminary estimates by Statistics Canada pointing to a flat third quarter at best, the Canadian economy is already flirting with a technical recession (as defined by two consecutive quarters of contraction). We maintain our view that this is just the beginning of a drawn-out, sluggish growth path for the next several quarters as the cumulative lagged effect of higher interest rates and a slowdown in global demand work through the economy. We revised down GDP growth for this year by 10 basis points to 1.1%, and we

...- The Canadian economy has cooled rapidly in recent months. We forecast sluggish growth of 0.8% in 2024 and 1.4% in 2025. - With subpar domestic demand in store, the job market will also remain sluggish with unemployment rising to a 6.1% average in 2024 from a 5.4% average this year. - Barring a significant upward surprise from the consumer price index, we now expect the Bank of Canada to maintain a policy rate of 5%, allowing past rate hikes to work through the economy. The first cuts are likely to come in the second quarter of next year. S&P Global Ratings expects the Canadian economy will continue to exhibit slower GDP growth for the rest of this year and next year. After a mild contraction in the second quarter, and with preliminary estimates by Statistics Canada pointing to a flat third quarter at best, the Canadian economy is already flirting with a technical recession (as defined by two consecutive quarters of contraction). We maintain our view that this is just the beginning of...

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