Our Canada Chart Pack has been updated with the latest data and our analysis of recent developments.
Strong immigration is unlikely to be enough to prevent a mild recession, with GDP contracting recently and the business surveys consistent with further declines. As house prices are falling again, household debt is elevated and high interest rates are still feeding through, the key risk is that the mild recession we forecast could morph into a much deeper downturn. Weak GDP growth and a rise in the unemployment rate will at least help to ease inflationary pressures, with headline CPI inflation falling back to the 2.0% target in the third quarter of 2024. That will allow the Bank of Canada to cut interest rates to 3.0% next year, leaving them far lower than markets are pricing in.
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