Is Canada going into recession? Here’s what experts are saying

Is Canada entering a recession? This is the main question that circles the minds of the economists in the country. Read this article to stay abreast of this discussion and understand what to expect from the country's future.


Understand the signs that suggest Canada might be in a recession

Canadian flag hoisted
Will the Great White go into recession soon? Read and find out. Source: Pixabay

In fact, in the economy and in investments, those who can anticipate market movements do well. Sometimes having this vision is really very difficult. In fact, an example is the current moment when experts ask themselves: “Is Canada going into recession”? Among scholars, opinions can differ greatly.

Thus, the indicators are currently not exactly conclusive. Thus, it remains to analyze the national situation and the impact of global events to try to answer this question. Therefore, in this article, we have collected opinions from experts on the subject.

In addition, we brought an overview of the indicators that may (or may not) indicate a Great White recession. Is Canada entering a recession? Read and draw your own conclusions.

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Is Canada heading for a recession?

For now, the specter of recession does not haunt Canada! Indeed, this is what Michael Veall, an economics professor at McMaster University in Hamilton, argues.

According to the scholar, the best way to know if a country is in a recession is to follow the GDP movement. Currently, this indicator is positive, which is a good sign. In addition, predictions are that this indicator will “keep green” for some time.

In fact, TD Bank predicted a slowdown in the national Gross Domestic Product. However, future indices tend to be all positive. In July, the bank expects growth of 4.4%.

At the end of the third quarter, this amount should be 3%. Furthermore, Canada is expected to close the year 2022 with a GDP of 1.6% (not bad). In fact, these predictions are in line with what the Royal Bank of Canada (RBC) considered.

According to the company, we can expect a GDP of 4.2% at the end of 2022 and 1.9% in 2023. Thus, despite the slowdown, the economy will continue to grow.

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Another important factor in measuring the chances of recession is the unemployment rate. In this criterion, the country is even more comfortable. We are experiencing the lowest unemployment rate since 1976: 5.1%.

In addition, the number of jobs is 70% higher than in the pre-pandemic moment, according to RBC. However, not everything is flowers. Read the next topic to find out the real reason for the question “Is Canada going into recession?”.

The potential causes of a Canadian recession

falling trend chart
Meet the “culprits” of a possible recession in Canada. Source: Pixabay

Despite the good news, there is the possibility of an economic recession in Canada. In July of this year, the country reached an inflationary record: 7.7%. This is the highest value of the index in the last 40 years.

To try to contain the general increase in values, the Royal Bank of Canada has already announced that it will increase the interest rate. On June 1, the interest rate was 1.5%.

According to experts, the index should reach 2.75% (almost double) in October. This measure could “dam up” the country’s economic growth. In fact, the strategy is to give up consumption through higher rates to balance demand and supply.

In addition, the country has not yet fully recovered from the marks left by the pandemic. Many companies are still unable to replace their employees and still have supply chain problems.

In addition, the US is showing signs that it will face a slowdown soon. If this materializes, Canada is expected to suffer losses as well. Thus, this deduction is possible due to the close relationship between the economy of these two countries.

However, these negative indicators are still offset by the rise in commodities, mainly oil and gas. It is worth mentioning that Canada is among the four largest oil exporters in the world and is not even the 15th largest importer.

What to expect from the future of Canada’s economy?

No recession, but just for now… Source: Adobe Stock

While other countries show clear signs of recession, Canadians can rest easy, but only for now. At least that’s what Michael Veall says. The expert says that the chances of a recession in the next 18 months are smaller.

However, it is still not possible to completely abandon this possibility. So, it is important that you use that “18-month breath” to prepare yourself financially.

For David Macdonald, senior economist at the Canadian Center for Policy Alternatives, this is the time to ask for better wages. As long as GDP is positive and there is a shortage of labor, you can bargain for better wages.

If we enter a recession, layoffs can occur and wages tend to be “frozen”. So it’s always good to be prepared for when the economy “decides it’s time to go to sleep.”

Now that you have an answer to the question about Canada entering a recession, understand what is happening to home prices. Are these falling? Is it time to buy a property or is it better to wait a little longer? Click on the link below and find out.

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