Most Canadian provinces will enter a recession in 2023 but Ontario is set to be among the hardest hit.
According to a report by Deloitte, Canada’s economy is set to see a cool down this year thanks to inflation and monetary tightening to cool price growth.
“The good news is that we are increasingly confident that peak price growth is behind us, with inflation decelerating steadily since hitting 8.1 per cent in June 2022. We expect to see price growth continue to slow, with moderation already evident in gasoline and food prices as well as homeowner replacement costs, in step with sliding housing prices,” the report stated.
Also, because the labour market is still so tight, this recession isn’t expected to be accompanied by an overall employment decline.
Still, a “deeper” recession is expected across the country this year, with just Manitoba and Saskatchewan enjoying positive growth, due to the rebound in their agricultural industries after drought conditions dramatically suppressed output in 2021.
The real GDP growth in Ontario was a strong 5.1 per cent in 2021. It slowed considerably to 2.4 per cent in 2022.
Looking to the future, it’s expected to be -1.3 per cent in 2023. The same is forecasted for both British Columbia and Quebec.
Then, in 2024, the BC economy should be up again as real GDP growth is forecast to be 1.9 per cent.
The report added that the impact of the housing market downturn will be more pronounced in central Canada and BC thanks to Ontario and BC having the most expensive housing markets and, in return, the highest debt burdens.
Quebec and Ontario are also very exposed to conditions in the United States, so the “downturn south of the border will negatively affect export prospects,” dragging down growth in both provinces.
Job losses are expected to remain low during the predicted upcoming recession thanks to the scarcity of labour on the other side of it, with most of the losses in sectors such as construction, information, culture, and recreation.
“This is shaping up to be another rocky year for the Canadian economy,” Deloitte researchers said in the report. “But we’re getting rather used to calling on our resilience and acting nimbly to position ourselves to weather the economic storm — the upcoming recession is simply the latest wave.”
To learn more, you can read the full report by Deloitte.