Canada’s economy is largely expected to rebound this year, but a recent report suggests Canada could fare worse than similar countries in 2024 due to high levels of household debt.
An Oxford Economics report projects interest rates will come down in late 2024 as Canada experiences a “modest recovery.” But the researchers cautioned that the bounce-back will fall below consensus projections and “worse than other advanced economies.”
“One of the reasons we think Canada is going to have a recession and the U.S. might avoid one is because we have highly indebted households that are very dependant on the housing market and the economy and those impacts are flowing through now,” Tony Stillo, Oxford Economics’ director of economics for Canada, told BNN Bloomberg in Wednesday interview.
Overall, the December report suggested that Canadians will remain reluctant to spend even as interest rates come down.
It also predicted immigration will help the labour market, but hurt the country’s housing supply.
“(Immigration) will benefit the economy,” Stillo said in the interview. “What we’re seeing is that it adds to the labour supply, but it takes a while for newcomers to fully settle into the economy, so that benefit for the economy in terms of higher actual GDP will be a few years away,”
Stillo doesn’t expect elevated immigration figures will impact home prices, as newcomers typically rent for a few years when they first arrive in the country. That means rental prices will be squeezed, but home prices shouldn’t feel the effects, he explained.
GOVERNMENT POLICY
Stillo said he expects governments will come up with smaller measures to fight economic slowdown in order to avoid stoking inflation.
“What we’re expecting to see is modest targeted measures like you’ve seen to date, whether it’s the exemption from the carbon tax for home heating fuel, the GST exemption for purpose-built rentals, the grocery rebate, things of that nature,” he said.
BUSINESS INVESTMENT
If Canada wants to get back on the right track, it needs a boost from businesses, Stillo said.
“We’ve had lacklustre business investment for some time, what we need to see is higher investment by businesses (and) government as well in terms of the infrastructure that supports growth, and then you’ll see that benefit in terms of higher productivity,” he said.
“We have to improve our capital investment per worker, per person, and then we will hopefully get that benefit in productivity and higher living standards.”
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
