Canada set to avoid recession this year: RSM
By Adam FreillConstruction Financing Residential
RSM Canada study suggests prospects of a recession in Canada will be pushed into 2024, with the remainder of 2023 looking steady.
With the Bank of Canada recently holding its September interest rate, global provider of assurance, tax and consulting services RSM Canada is suggesting that Canada will likely avoid a recession this year.
The global provider of assurance, tax and consulting services, recently shared its latest edition of The Real Economy Canada – a quarterly report that provides Canadian businesses with analysis and insights on the country’s complex economic conditions. It uses the term “real economy” in reference to the segment of the economy that produces the goods and provides the services we rely on every day.
With the Bank of Canada recently holding its September interest rate, RSM Canada’s latest report examines how the country’s economy is steadily cooling after months of higher inflation, however initial predictions of a recession this year are now unlikely and more feasible in the second half of 2024. With these conditions in mind, the company says the earliest opportunity for interest rate cuts will be the second quarter of 2024.
The report also explores a key measure that Canada can explore to drive more productivity and growth – capitalizing on its recent policy to increase immigration by tapping into the underutilized skilled labour coming into Canada.
According to the report’s updated economic forecast, Canada’s recession probability over the next 12 months has lowered to 60 per cent from 75 per cent, and the Canadian economy will remain steady in the last quarter, with a slowdown continuing into the first half of next year.
And while job vacancies remain elevated above pre-pandemic levels, they have decreased to the lowest level since May 2021. That decline indicates a cooling labour market and is a trend the report authors expect will continue through the year’s end.
“The Canadian economy has displayed remarkable resilience this year, defying expectations of a downturn. While we may muddle through the rest of the year with slower growth, Canada will likely avoid a recession this year,” stated Tu Nguyen, an economist with RSM Canada. “In addition, a 40 per cent probability of a soft landing is promising thanks to our strong labour demand, healthy consumer spending and a housing market that is still robust. All these factors are in part fueled by Canada’s ambitious immigration policy and healthy household savings from the pandemic.”
The Real Economy Canada report can be downloaded on the RSM Canada webpage.