While he does not know if the Quebec economy will fall into recession, Quebec Finance Minister Éric Girard warns that a period of stagnation is inevitable.
“They say there’s a 50% chance of a recession, but what’s really important is that there’s a 100% chance the economy will slow down,” he said, Tuesday, during a presentation at an event organized by the Autorité des marchés financiers (AMF) in Montreal.
“We are in a period where growth will approach zero point zero percent,” he says. When you’re so close to zero percent, you could be a little above or a little below, so you could have two consecutive quarters of negative growth. [la définition technique d’une récession]. »
Rising interest rates affect the economy. “When you take interest rates that are almost zero percent and bring them to 4%, [ça crée un] shock to the economy. It’s certain that the sectors that are sensitive to interest rates will slow down,” said the Minister.
This slowdown notably affects the residential real estate sector and companies with variable rate debt. “It’s started,” he says.
Mr. Girard says, however, that if there was a recession, it would be “weak” and “manageable”. The Minister will provide an update on Québec’s economic and financial situation in an update scheduled for December 8.
The great financier of the Legault government has also opened the door to a form of financial support for businesses. “We will be there to help companies, if there were situations where the rise in interest rates led to liquidity problems for some of them. »
However, he wanted to be reassuring about inflation, which reached a rate of 6.4% in Quebec in October compared to 6.5% in September, according to Statistics Canada data. This compares to an inflation of 6.9% for the whole country.
Despite relatively high annual inflation in October, Mr. Girard believes that the indicators point in the direction of a moderation in price growth. He notes that the price of raw materials and goods is decreasing, even if inflation remains high in the food sector.
” The average [de l’inflation sur une période de] one month, three months, six months, is below average [d’]a year. All the indicators we look at show that inflation is slowing. »