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Global growth slowing but Canadian recession not imminent

By The IJ Staff | October 07 2019 11:45AM

Photo: Freepik

The Conference Board of Canada released its quarterly Canadian Outlook executive summary today, which suggests that ongoing trade tensions and uncertainty in the global economy is impacting Canadian business investment and household purchasing power.

That said, the Conference Board says a recession is not in the cards for Canada – a strong labour market in the first half of the year along with higher wages are expected to buoy consumer spending going forward.

“The Canadian economy is set for a period of slower growth due to the weakness in the global economy” says Matthew Stewart, director of national forecast, forecasting and analysis. “This will lead the Bank of Canada to cut interest rates early next year.”

Overall he says the Conference Board expects real GDP to expand by 1.6 per cent this year before posting a gain of 1.8 per cent in 2020.

According to the report – which looks at consumer expenditures, housing, government and non-energy business investment and trade, along with the Conference Board’s outlook for the financial, labour and energy markets – global economic growth is slowing as trade tensions impact businesses’ investment decisions and households’ purchasing power.

After gaining nearly four per cent in the second quarter, growth in the Canadian economy is also expected to moderate over the remainder of the year. That said, the tight labour markets will help to sustain wage growth and consumer spending over the near term.  “It has been another weak year for business investment in Canada; however, 2020 looks more promising with energy investment poised for a small rebound and as pipeline projects move forward,” say the report’s authors. They add that the export sector will likely most feel the impact of slowing global demand.

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