Canada Headed For Recession

Canada's economy is headed for a recession next year, says a report from RBC economists. Nathan Janzen and Claire Fan say inflation, labour shortages, and rising interest rates will drag on Canadian growth, pushing the economy into a moderate contraction in 2023. The jobless rate will rise next year, but to less severe levels than in previous downturns. And, though higher rates will restrict growth, they’re necessary to tame inflation and cool an overheating economy. Household spending that accelerated out of pandemic lockdowns will slow as higher prices, interest rates, and unemployment hit households. The report says this recession will be moderate and short-lived by historical standards and can be reversed once inflation settles enough for central banks to lower rates.