More economists are now warning that the Canadian economy faces an imminent recession which could arrive by early next year.
The latest to join the growing chorus of experts telling Canadians to brace for further economic woes include economists from Desjardins Group and the Royal Bank of Canada.
“Our view is that we’re going to see a continued slowing of sales activity in Canada, and continued weakness on the price side going forward,” said Desjardins Group economist Randall Bartlett.
This comes after the Bank of Canada (BoC) hiked interest rates to 3.25% as inflation continues to take a toll on the country’s finances. In August the Consumer Price Index fell to 7% down from 7.6% the month prior but the cost of food has spiked by 10.8%.
An official statement from the BoC also indicated more hikes were likely coming soon.
“Given the outlook for inflation, the Governing Council still judges that the policy interest rate will need to rise further,” read the statement.
“Quantitative tightening is complementing increases in the policy rate. As the effects of tighter monetary policy work through the economy, we will be assessing how much higher interest rates need to go to return inflation to target.”
According to a note by RBC economists, Canada’s recession could be moderate when compared to the prospects other countries are facing.
“We expect the year ahead to bring recessions for Canada, the United States, the Euro area, and the United Kingdom,” wrote RBC.
“That said, we expect the coming downturn in Canada will be ‘moderate’ by historical standards.”
Conservative leader Pierre Poilievre blasted the Trudeau Liberals on Monday calling on the federal government to axe the carbon tax and cap federal government spending.
“Inflation continues to eat away at people’s paycheques, with grocery prices up 10.8%, the fastest pace in more than 4 decades. Make more Canadian food, energy & homes. Axe the carbon tax. Cap govt spending with a Pay-As-You-Go law,” tweeted Poilievre.
