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Why no 'deep, dark recession' is expected in Canada

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A new forecast from Deloitte predicts that Canada's economic struggles will begin to ease next year and by 2025 the Bank of Canada may even begin cutting the key lending rate.

"We're still looking at pretty stagnant growth… in the near term," Deloitte Canada's Dawn Desjardins, co-author of report, told Â鶹´«Ã½ Channel's Marcia MacMillan on Thursday. "No deep, dark recession is in our forecast."

ECONOMY IS SLOWING

Desjardins said the Bank of Canada's rate increases have started to take hold and consumer spending has started to slow after surprisingly "robust growth" earlier this year.

Canada's labour markets have also started to "soften," according to Deloitte Canada's chief economist, which hints that slower economic activity is likely in the "near-term" for Canada.

"As we start to see this weakening in the economy, we think that will be a catalyst for price pressures to ease," she said.

RATE CUTS IN 2025?

The weakening of the economy means that consumers will begin to see relief from price pressures, but could also allow the Bank of Canada to pivot away from raising interest rates.

"We do think that that'll put them in position to start to lower that policy rate," Desjardins said.

Desjardins predicts that by 2025 a combination of lower inflation and easing interest rates will likely spark a "resurgence" in growth among both consumers and businesses.

Click the video at the top of this article for what Desjardins thinks is in store for Canada's housing market.

With files from The Canadian Press 

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