Close X
Friday, November 29, 2024
ADVT 
National

Economy to slow considerably this year: PBO

Darpan News Desk The Canadian Press, 13 Oct, 2022 10:35 AM
  • Economy to slow considerably this year: PBO

OTTAWA - The parliamentary budget officer is projecting the economy will slow considerably in the second half of 2022 and remain weak next year as the Bank of Canada continues to raise interest rates.

In his latest economic and fiscal outlook, budget watchdog Yves Giroux says he expects the Bank of Canada to raise its key interest rate to four per cent by the end of the year, a move which is in line with financial markets' expectations.

Economists are anticipating an economic slowdown as higher interest rates slow spending by people and businesses.

Since March, the Bank of Canada has raised its key interest rate from 0.25 per cent to 3.25 per cent in an effort to combat inflation. Canada's annual inflation rate was 7.0 per cent in August.

The housing market has already begun cooling in response to higher interest rates, however, the full effect of the central bank's rate hikes will take more time to work its way through the economy.

The PBO report also projects the unemployment rate will rise to 5.8 per cent by late 2023 before falling again. That increase is moderated by decreases in the labour force participation rate as more Canadians retire.

Statistics Canada's September job report showed the labour market was still tight, with the unemployment rate at 5.2 per cent.

As inflation slows and heads toward the central bank's target of two per cent, the PBO expects the Bank of Canada to begin lowering interest rates toward the end of next year, bringing its key rate down to 2.5 per cent by the end of 2024.

The outlook also estimates the federal deficit will decline to $25.8 billion, or 0.9 per cent of GDP, for the 2022-23 fiscal year.

The deficit was $97 billion, or 3.9 per cent of GDP, during the prior fiscal year.

Assuming no new measures are introduced and existing temporary measures expire as expected, the PBO estimates the deficit will decline further to $3.1 billion, or 0.1 per cent of GDP, by 2027-28.

The PBO is also projecting that by 2027-28, the federal debt-to-GDP ratio will decline from its peak in 2020-21, but still remain above pre-pandemic levels.

The PBO said the uncertainty surrounding the report's projections is high. It outlined various risks to its forecasts, including tighter monetary policy causing a more severe economic slowdown, inflation persisting longer than expected and higher fiscal spending.

"With the synchronized tightening of monetary policy by major central banks around the world to reduce high inflation, there is a risk of a more severe global slowdown, which would negatively affect the Canadian economy and federal finances," Giroux said.

MORE National ARTICLES

Coroner lists 16 suspected heat deaths in B.C.

Coroner lists 16 suspected heat deaths in B.C.
A report from the service on deaths says the fatalities happened between July 26 and Aug. 3, although the numbers are considered preliminary until investigations into each case conclude. The report shows all but two of the deaths happened in the Interior or Fraser health regions and involved victims aged 40 to over 90, with six in their 70s.

Coroner lists 16 suspected heat deaths in B.C.

West Fraser cuts mill shifts, 147 jobs in B.C.

West Fraser cuts mill shifts, 147 jobs in B.C.
The job cuts, expected to take place over the fourth quarter, come as the company permanently cuts about 170 million board feet of combined production at its Fraser Lake and Williams Lake sawmills and about 85 million square feet of plywood production at its Quesnel operation.

West Fraser cuts mill shifts, 147 jobs in B.C.

B.C. fund cuts plastic pollution: minister

B.C. fund cuts plastic pollution: minister
Environment Minister George Heyman says the province is a North American leader in plastic recycling and the government's CleanBC Plastic Action Fund is looking for more innovations to cut plastic pollution.

B.C. fund cuts plastic pollution: minister

Stable weather aids B.C. wildfire battle

Stable weather aids B.C. wildfire battle
The BC Wildfire Service says the the wildfire covers 68 square kilometres southwest of Penticton, with most of the recent growth due to planned ignitions needed to create the control lines. An update from the wildfire service says newly created control lines are "holding well."

Stable weather aids B.C. wildfire battle

30 year old taxi passenger dies in Guildford shooting, taxi driver in hospital

30 year old taxi passenger dies in Guildford shooting, taxi driver in hospital
Surrey RCMP received the report of shots fired at a taxi in a parking lot in the 14800 block of 108 Avenue. Police attended the scene and found both occupants of the vehicle shot. The passenger, a 30-year-old male died, and the driver of the taxi was transported to hospital with serious injuries. 

30 year old taxi passenger dies in Guildford shooting, taxi driver in hospital

Elderly man and woman in hospital after assault in attempted break and enter: Richmond RCMP

Elderly man and woman in hospital after assault in attempted break and enter: Richmond RCMP
A forensic composite sketch of the suspect has been compiled. The suspect is described as a Caucasian man in his 20s, 178 cm (5’ 10) tall, slim build, with brown curly hair and a blue/green flower tattoo on right forearm.

Elderly man and woman in hospital after assault in attempted break and enter: Richmond RCMP