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Recession in Canada is Coming in Early 2024?
Preliminary data from Statistics Canada indicates that the Canadian economy may have entered a technical recession as high interest rates have a negative impact on consumer spending. Meanwhile, early estimates point to the arrival of a Canadian recession in early 2024.
Canada’s economy will continue to be burdened by increased borrowing rates, which will cause growth to peak in the first half of next year. Oxford predicts that the Canadian recession would last until the second quarter of 2024, with a 1.1% peak to trough decrease in the country’s gross domestic product. Oxford believes the recession began in the third quarter of 2023.
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You may learn more about the impending recession in Canada by reading this article, which will provide you with further information.
What is meant by Recession?
Technically speaking, two consecutive quarters of negative growth constitute a recession; nevertheless, most analysts prefer to identify broader-based weakness in order to classify a downturn as such. It may also be defined as a prolonged period of low or negative real GDP (output) growth coupled with a notable increase in the unemployment rate.
A recession is a notable, pervasive, and extended decline in the level of economic activity. From the apex of the previous growth to the bottom of the downturn, economists calculate the duration of a recession. Even though a recession could only last a few months, it might take years for the economy to return to its previous level.
Recession in Canada Details
| Post Title | Recession in Canada is Coming in Early 2024 |
| Country | Canada |
| Expected GDP Decrease Percent | 1.1% |
| More Readings | Present Here |
All We Know About Canada’s Economy Change
Canada’s economy will continue to be burdened by increased borrowing rates, which will cause growth to peak in the first half of next year. Nonetheless, as interest rates begin to decline, activity ought to pick up in the second half.
In 2024, we project a mere 0.9% rise in the real GDP of Canada, with a couple of quarters of negative growth in the first part of the year. It seems doubtful to other economists that the Canadian economy will expand in any way. The GDP is predicted by capital Economics to shrink by 0.2% in the fourth quarter and 1% in the first quarter of 2024.
Canada’s inflation rate has increased by around 2% annually during the previous 30 years, which is a very consistent rate. However, during the 1970s and 1980s, price increases were typical, averaging 8% and sometimes up to 13%. It is anticipated that the first half of 2024 would see a high in consumer belt tightness, lowering expenditure to below 1 percent.
Over the upcoming months, inflation in food prices is predicted to stay between 4 and 5%. Food is frequently sold on international markets, and the depreciation of the Canadian currency will contribute to rising costs. In addition, housing-related costs—such as rent and mortgage interest—will keep rising faster than the Bank of Canada’s 2% inflation objective.
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Future Predictions
The preliminary estimate of GDP released by Statistics Canada suggests that the Canadian economy may have entered a technical recession. According to the analysis, early in 2024, the economy would continue to be burdened by increased interest rates, inflation, forest fires, and drought conditions.
The Bank of Canada made the decision to maintain its benchmark interest rate at five percent. The economy’s growth is anticipated to be further restrained by high interest rates, especially if more people choose to refinance their mortgages at higher rates. Therefore, a recent Bank of Canada prediction indicates that economic growth would continue to be poor until the middle of 2024.
Oxford projects that the economic slowdown in 2024 will result in a 1.2% decrease in overall government income. Meanwhile, just as a result of increased unemployment, social assistance, and debt payments, government expenditure is predicted to increase by 4.4%. This might result in a $66 billion deficit this year from the government’s total fiscal balance, which was in a $2.2 billion surplus in 2023.
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