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Canadians expect economy to enter recession this year: Central bank surveys
The negative sentiment was shown in the surveys for the last quarter of 2022 published by the Bank of Canada
Toronto: Pessimism over the economy is growing as Canadians expect the country to enter a recession this year, according to the results of a pair of surveys conducted by Canada’s central bank.
The negative sentiment was shown in the surveys for the last quarter of 2022 published by the Bank of Canada on Monday.
“Concern about the economy is widespread. On average, consumers said the likelihood of a recession in the next 12 months is 60%,” the first survey on consumer sentiment noted.
Just under half believe the recession will be moderate. However, lower-income Canadians expect it to be severe.
“People also think high government spending is keeping the Bank from lowering inflation,” that survey said.
Inflation continues to be a sticky issue in Canada, and according to the latest figures posted by the Bank of Canada is at 6.8%, having reduced from a high of 8.1% in July last year.
Among the main findings of the consumers survey was that most of them “expect a mild to moderate recession in Canada within the next 12 months. Of respondents who indicated a recession would affect them, a majority anticipate they would have difficulty paying bills or would face other financial impacts”.
However, it added that less than one-sixth of respondents who expect to be affected by a recession anticipate losing their job.
Negativity is also reflected in the fourth-quarter 2022 Business Outlook Survey and the Business Leaders’ Pulse surveys from October 2022 through January 2023. They underscore that “business sentiment has continued to weaken. As a result of rising interest rates, firms’ sales expectations and investment plans are softening” a release from the Bank of Canada stated.
Inflation remains far above the Bank’s target of 2% and has led to a number of increases in the Policy Interest Rate, which is at 4.25%. Another hike is expected on January 25.
