Canada is heading for a mild recession as high borrowing costs, a slowdown in the United States and persistent inflation heighten the country’s economic uncertainty, a new report finds.
Deloitte Canada’s latest economic outlook, released ahead of the federal budget on Tuesday, indicates that the country’s tight monetary policy is expected to dampen its economic growth this year.
But research suggests the recession won’t be as big as expected thanks to the resilience of the labor market, which is keeping incomes high.
The report projects that real gross domestic product will decline 0.5% this year, before rebounding to 2.0% growth in 2024, while inflation is expected to slow rapidly throughout the year.
Deloitte says the federal budget, tabled in Ottawa on Tuesday afternoon, will likely include affordability measures to help low-income Canadians, health care support for provinces and incentives to reduce carbon emissions.
These priorities should not have a noticeable impact on inflation, provided that spending increases are not large, the report adds.
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