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RBC Says Canada Is Headed For a Mild Recession in 2023

Economy Jul 07, 2022 11:19
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2/2 © Bloomberg. A Royal Bank of Canada (RBC) branch in Montreal, Quebec, Canada, on Thursday, April 28, 2022. Five Canadian banks had their price targets cut an average of 6% at RBC Capital Markets on prospects that escalating macro risks could weigh on profits. 2/2

(Bloomberg) -- Inflation, labor shortages and rising interest rates will push the Canadian economy into a moderate recession next year, according to the Royal Bank of Canada (TSX:RY). 

The economy is expected to contract by annualized 0.5% pace in the second and third quarters of 2023, according to new forecasts from economists at Canada’s largest bank. Growth will average 0.8% next year, compared with 3.7% this year. 

The recession will be moderate and short-lived by historical standards and can be reversed once inflation settles enough for central banks to lower rates, economists Claire Fan and Nathan Janzen said in a note on Thursday. 

“Though higher rates will technically push Canada toward a contraction, the Bank of Canada now has little choice but to act,” Fan and Janzen said. “Inflation has been too strong for too long and is starting to creep into longer-run business and consumer expectations.”

©2022 Bloomberg L.P.

RBC Says Canada Is Headed For a Mild Recession in 2023
 

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