Outlook calls for only modest growth for 2024, better in 2025
Canada’s economy is not set to reignite any time soon with growth remaining sluggish at least until the end of the year.
The latest outlook from the Conference Board of Canada points to the lag in lower inflation and interest rates having an impact on the economy and expects that overall GDP will come in at 1.1% for 2024 before rising to 1.7% for 2025.
The good news is that business investment is expected to pick up as labour costs stabilize and concern over high costs of doing business ease. For now though, businesses are still cautious about investing.
“Following years of slow progress, business investment is expected to gain substantial momentum in 2025,” said Cory Renner, Associate Director, Economic Forecasting at The Conference Board of Canada. “This resurgence in capital spending will be spearheaded by the automotive and resource sectors, supporting Canada’s recovery.
For those looking for work, weak business confidence will likely still restrict hiring in the fourth quarter and the unemployment rate is likely to tick higher in the near term.
Personal finances are stained and housing affordability remains a key challenge, but the report notes that the lower cost of borrowing and policy changes should at least prevent the situation from worsening.
The resilience of the US economy – the forecast is for 2.6% growth in 2024 and 1.8% in 2025 - will have a positive impact on the Canadian economy with growth in net exports, while imports are expected to rise at a slower pace. However, the upcoming US election is posing significant downside risk to tax and trade policy.
