Canadian economy to get 'back on its feet' next year, Deloitte Canada says
Canada's near-term economic struggles will ease next year when growth returns and the Bank of Canada begins cutting its key lending rate, a new forecast from Deloitte Canada said.
A better-than-expected U.S. outlook and continued population growth here will offset some of the downward pressure from high household debt, soaring interest payments and stubbornly persistent inflation, the company said in its latest economic outlook report, released Thursday.
"We do have an economy getting back on its feet in the first half of next year," said Dawn Desjardins, chief economist at Deloitte Canada, who co-authored the report.
"The recovery will pick up steam in the second half of 2024 because it's during the time we anticipate the Bank of Canada will be able to pivot from having high interest rates we're living with today," she said.
The report estimates GDP will rise one per cent this year and 0.9 per cent next year. Deloitte Canada had earlier predicted GDP would contract 0.9 per cent in 2023.
The next two quarters for the Canadian economy, however, are going to be tough, Desjardins said.
"Canada's economy has entered a rough patch and the growth is likely to be negligible," she said. "In fact, we have a few negative quarters in the forecast."
The slowdown results from the months-long crackdown on high inflation by the Bank of Canada, pushing household debt and interest payments higher -- which the Deloitte economist expects will continue in the near term.
Desjardins said a third of Canadian households have a mortgage, adding that an increasing number of them are moving to refinance their property as they struggle to keep up with monthly mortgage payments -- a trend expected to continue going forward.
"We do think the housing market will continue to be relatively sluggish (in the near term)," Desjardins said, which would affect other sectors as well.
"When that happens, people are not buying durable goods like refrigerators, stoves and washing machines they would normally purchase when they buy a new home."
Despite the affordability and housing crises, Deloitte Canada said strengthening U.S. trade and population growth in Canada appear to be helping the country avoid a deeper recession.
Canada's population is set to jump 2.7 per cent this year, the only other time the country came close to that type of population surge was back in 1971 when it rose 2.2 per cent.
Economists suggest population growth would outpace job gains in the coming months, with the unemployment rate expected to hit 5.9 per cent early next year. A pullback in hiring would drive unemployment and, in turn, slow down consumer spending.
Canada's record-high population surge also pushed Deloitte to recalibrate its expectations for consumer spending. The report suggests real consumption on a per capita basis dropped 1.5 per cent over the last year, more in line with falling real wages and high interest rates.
"We have finally seen evidence that consumers are taking a step back," Desjardins said. "The bank's rate increases are stressing some budgets."
The report suggests consumer spending this year will grow by two per cent but slow to a pace of 1.2 per cent in 2024.
Deloitte Canada estimates the overnight interest rate would fall to a neutral level of three per cent by mid-2025.
For the business sector, the report says the investment outlook remains muted in the near term as cost pressures and economic uncertainties hamper confidence among Canadians.
This report by The Canadian Press was first published Sept. 28, 2023.
The Shopping Trends team is independent of the journalists at CTV News. We may earn a commission when you use our links to shop. Read about us.
Celebrating with your family this December could come with increased expenses as data shows many traditional holiday foods are going up in price.
Canadians increasingly turning to charities to meet essential needs, but cost of living also hitting donations
Every Giving Tuesday, many Canadians generously dig into their wallets to donate to charities, but as the cost of living climbs, research suggests many Canadians are also in need of help.
Canada's grocery code of conduct is in the final stages with advocates saying it would help lower food prices while big grocers say it won't.
A federal housing advocate is accusing every level of government in Canada of failing to uphold the Inuit's right to housing -- and therefore denying their human rights.
With inflation, rising interest rates, and higher costs for gas, groceries and housing, many Canadians are feeling the financial pinch and now personal bankruptcies are on the rise.
But the majority of Americans say they tip 15 per cent or less for a typical meal at a sit-down restaurant, according to a wide-ranging new poll on tipping attitudes from Pew Research Center. The poll surveyed nearly 12,000 people.
As the grocery code of conduct nears completion, the Canadian industry's biggest player is raising concerns the guidelines could add fuel to the food inflation fire.
A new report from Statistics Canada estimates how much parents will spend on children over the course of their lifetime.
CTVNews.ca Top Stories
Families that need help conceiving a child are met with financial burdens that should be covered through government health care and insurance, advocates say.
The Earth is flat. We have been secretly contacted by intelligent beings from other planets. Neil Armstrong and Buzz Aldrin did not land on the moon in 1969. They may sound like bizarre statements, but a new poll suggests a sizable number of Canadians believe in these and other conspiracy theories.
Quebec entrepreneur Daniel Langlois and his spouse Dominique Marchand have died in their adopted home of Dominica, in the Caribbean, a source has confirmed.
Myles Goodwyn, the award-winning Canadian singer and songwriter who shot to stardom as the former lead singer of April Wine, has died at age 75.
Outrage seen from the community and across the country online after the news broke Friday that the City of Moncton would not display the Menorah this year.
Amid a referendum that will see Venezuelans asked about the future of a chunk of neighbouring Guyana that Venezuela currently claims ownership over, Canada has adjusted its travel advisory to warn against travelling in Guyana near the border.
An inmate has died at Her Majesty's Penitentiary in Newfoundland, one of the oldest operating provincial jails in the country, officials with the provincial Justice Department confirmed.
Ballistics missiles fired by Yemen's Houthi rebels struck three commercial ships Sunday in the Red Sea, while a U.S. warship shot down three drones in self-defence during the hourslong assault, the U.S. military said. The Iranian-backed Houthis claimed two of the attacks.
Ten-year-old Ofri Brodutch had barely been released from weeks of captivity by Hamas in the Gaza Strip before she began talking about her next trip to Canada. But her uncle, Israeli-born, Toronto-based scientist Aharon Brodutch, says her excitement at the prospect of another summer spent visiting her Canadian cousins contrasts sharply with the rest of her current physical and mental state.
Israel expands Gaza ground offensive, says efforts in south will be 'no less strength' than in north
The Israeli military said Sunday its ground offensive had expanded to every part of Gaza, and it ordered more evacuations in the crowded south while vowing that operations there against Hamas would be "no less strength" than its shattering ones in the north.
Ukrainian officials on Sunday launched an investigation into allegations that Russian forces killed surrendering Ukrainian soldiers -- a war crime if confirmed -- after grainy footage on social media appeared to show two uniformed men being shot at close range after emerging from a dugout.
A former American diplomat who served as U.S. ambassador to Bolivia has been arrested in a long-running FBI counterintelligence investigation, accused of secretly serving as an agent of Cuba's government, The Associated Press has learned.
A bloodstain by a bridge over the Seine river was the only remaining sign on Sunday of a fatal knife attack 12 hours earlier on a German tourist, allegedly carried out by a young man under watch for suspected Islamic radicalization.
Canada's heritage minister insists the federal government is still working to get Facebook and Instagram parent company Meta back to the bargaining table to negotiate a deal to compensate Canadian news organizations as part of the regulatory process for the controversial Online News Act.
Conservatives faced a barrage of partisan fire Friday in the House of Commons as their political rivals accused the official Opposition of trying to stall measures aimed at helping Ukraine.
U.S. assassination attempt charges 'confirm' Trudeau's claims about India had 'real substance,' former national security advisers say
The indictment of an Indian national for the attempted assassination of a Sikh separatist and dual U.S.-Canadian national 'validates' Prime Minister Justin Trudeau's allegations that the Indian government may have been involved in the killing of a Canadian citizen as having 'real substance,' according to two of Canada's former national security advisers.
Health Canada has called the opioid crisis one of the most serious public health threats in recent history, and an addictions specialist says everyone can play a part in helping reduce the death toll. All it takes is access to naloxone, a life-saving medication that temporarily reverses an opioid overdose.
Earth is running a fever. And UN climate talks are focusing on the contagious effect on human health
With Planet Earth running a fever, UN climate talks focused Sunday on the contagious effects on human health. Under a brown haze over Dubai, the COP28 summit moved to concerns about health issues like the deaths of at least 7 million people globally from air pollution each year and the spread of diseases like cholera and malaria as global warming upends weather systems.
An audacious collaboration between geneticists and conservationists plans to bring back the extinct dodo and reintroduce it to its once-native habitat in Mauritius.
Montana's first-in-the-nation law banning the video-sharing app TikTok in the state was blocked Thursday, one month before it was set to take effect, by a federal judge who called the measure unconstitutional.
New observations from the James Webb Space Telescope have confirmed the existence of a massive, dusty, star-forming galaxy which was first spotted years ago by a ground telescope, but was completely invisible to the Hubble Space Telescope.
Beyonce ruled the box office this weekend. Her concert picture, 'Renaissance: A Film by Beyonce,' opened in first place with US$21 million in North American ticket sales, according to estimates from AMC Theatres Sunday.
After 50 years of Kiss, the band is now interested in a kind of immortality, using digital avatars of themselves for virtual performances.