What is the forecast for the economy in 2023?
What is the Outlook for the economy of Canada and the world for 2023? Check out Chief Economist Charles St-Arnaud’s Economic Outlook for the year ahead linked and summarized below
The Great Consumer Squeeze
- The great consumer squeeze will remain an essential theme for the economic outlook, with a premise that household finances are being squeezed by both:
- The erosion in purchasing power coming from the high inflation rate, with prices rising faster than wages.
- Fast-rising interest rates, leading to a rapid increase in the cost of households to service their record level of debt.
- Growth in Canada slowed to a crawl in the second half of 2022 and we expect the economy to go through a mild recession in the first half of 2023, as fast-rising interest rates start to impact the broader economy.
- While consumer-related sectors will underperform, we don’t expect business investment and exports to be robust enough to prevent a recession.
- We expect that weaker growth will lead to some underperformance in the labour market. However, we do not expect a big wave of job layoffs at this point, as many employers who have faced labour shortages over the past year may be reluctant to reduce their workforce.
- Oil production in Alberta, both in volume and value, is reaching record levels. However, despite oil production and revenues climbing to unprecedented levels, Alberta is not experiencing an economic boom similar to what we saw in the mid-2010s and the 2000s because the nature of the oil industry has changed, likely forever, and its impact on the economy has weakened.
Download and read the full Economic Outlook here!