Global audit, tax and consulting services provider, RSM Canada, has published the first edition of its 2023 quarterly report, The Real Economy Canada, which provides businesses with analysis and insight into the country’s economic conditions.
In the most recent report, RSM Canada says it expects inflation to fall to three per cent by the end of 2023 and return to the two per cent target by the end of 2024, while waning consumer confidence and slower retails sales, thanks to persistent inflation, will translate into lower gross domestic product (GDP) growth in 2023 and 2024. Specifically, GDP is projected to decline from 3.25 per cent in 2022 to just under one per cent in 2023 before rebounding to two per cent in 2024.
“Oil prices have put a floor under the economy’s decline, though combined interest rate and inflation shocks have put a dent in housing, an increasingly important sector to the economy,” they write. “Interest rates are unlikely to decline for the foreseeable future.” The report states that RSM Canada is expecting the Bank of Canada to raise its policy rate to 4.75 per cent by the middle of 2023 before holding rates in place. “The rising risk of a recession and a larger than expected housing contraction cannot be dismissed.”