Royal Bank of Canada has predicted that there will be a modest recession in Canada 2023. Their newest prediction is that this decline will start in the first quarter of next year. Increased costs and interest rates will reduce the average household’s purchasing power by $3,000, which will have an impact on what they can buy. Canadian households and businesses won’t feel the effects of the next recession equally. Manufacturing will probably be one of the first industries to start contracting, although other high-contact service industries, including tourism and hospitality, may do better than in a ‘typical’ historical recession.
As an exporter of commodities and a nation that performed pretty well through the pandemic, Canada has been affected by the war in Ukraine less severely than many other nations. Despite this, the pandemic continues to pose a risk, inflation is much above goal, and residential affordability is a key worry following a protracted boom that may have reached its peak. Staff anticipates continued significant economic cooling, with downside risks to growth and the possibility of a mild recession in the event of shocks.