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OTTAWA, Jan. 16, 2024 (GLOBE NEWSWIRE) — Canada remains in an economic standstill as high interest rates weigh on the purchasing power of businesses and consumers, according to new studies from the Conference Board of Canada. The country’s genuine GDP is expected to grow by 0. 6% in 2024.
“Inflation has moderated and is expected to continue to moderate, but the Bank of Canada is unlikely to sharply raise rates before the middle of the year,” according to Ted Mallett, director of economic forecasting at the Conference Board of Canada. “Once they come into force, the prospects for expansion in 2025 will be much better, at 2. 3 percent. »
The Canadian real estate sector is subject to contradictory forces, as demographic pressures demand a significant increase in structural activity, but high prices and high debt rates, among other factors, are holding it back at the same time. Promising policy adjustments have been made in all 3 grades of government, but they are sufficient and well-coordinated. Moreover, it will take years for those measures to be implemented in the market.
South of the border, the U. S. economy continues to defy expectations, with an annualized GDP expansion of 5. 2% in the third quarter, driven primarily by higher customer spending. While wage expansion remains at its peak and has not yet slowed down, encouraging progress has been made in bringing inflation down. enough to allow the Federal Reserve to halt any further rate increases. The fundamental view of the Conference Board of Canada is that the U. S. economic expansion will slow in the first part of 2024, but the economy will fall into a recession.
U. S. resilience greatly benefited Canada’s foreign industrial sector in 2023, but this influence is expected to moderate in 2024. Given that exports outstripped imports during the forecast period, the industrial sector will definitely contribute to genuine GDP expansion over the next five years.
The slowdown in the national economy has cooled the labor market. The Conference Board of Canada forecasts that the expansion of tasks will continue to be moderate in the first part of 2024, specifically in the personnel sector. With a peak of running-age foreign immigrants, the major influx of transients and permanent citizens are driving the expansion of the workforce. We expect labor force expansion to outpace employment expansion for much of 2024, leading to a further increase in the unemployment rate.
Business investment in Canada has also been affected by high borrowing costs. Capital investment in the oil sector will continue, although not at pre-pandemic levels. Measures are evolving with respect to the energy transition and post-Covid business models, but it is also too early to see how they will be identified in a sustainable investment pace. With contentious intergovernmental disagreements and federal elections on the horizon, the prospect of sweeping changes in primary policies increases corporate investment risk.
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About the Conference Board of Canada
The Conference Board of Canada is the country’s leading independent study organization. Since 1954, the Conference Board of Canada has provided studies supporting evidence-based decision making to solve Canada’s most challenging problems. Read more about our effect at the link here. Follow the Conference Board of Canada on Twitter @ConfBoardofCda.