Representative Image of Canada’s cooling economy. Image credit Unsplash/Towfiqu Barbhuiya
Ottawa/CMEDIA: Strong bounce back of the Canadian economy reportedly at the start of the year appears to have been short-lived, as new data suggests growth is following a downward trend,
The economy grew by 0.1 percent in February, Statistics Canada said Friday with the estimated growth of real gross domestic product at an annualized rate of 2.5 percent in the first quarter, and contracted in March by 0.1 percent
With high interest rates weighing on consumers and businesses, the Canadian economy is expected to become stagnant this year and potentially enter a recession.
The Bank of Canada is holding its key highest interest rate steady at 4.5 percent since 2007.
The upward trend of interest rate has resulted in a long-expected economic slowdown.
Driven by continued declines in wholesale and retail trade, in addition to mining and quarrying, the real GDP is expected to fall.
“The implied expectation in the market that we are going to be cutting our policy rate later in the year, that doesn’t look today like the most likely scenario to us,” Bank of Canada’s governor Tiff Macklem said on April 12 at a news conference.
With the annual inflation rate at 4.3 percent in March, the Bank of Canada expects the headline rate to fall to three percent by mid-year but a slow decline to two percent by the end of 2024.
The continuous slowdown of the economy would not only directly affect the labour market but would also lead to increased unemployment this year, as businesses facing slowing sales adjust their hiring plans.
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