Close X
Monday, November 11, 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

BC's anti-gang task force issues a public safety warning about 11 men with ties to gangs

BC's anti-gang task force issues a public safety warning about 11 men with ties to gangs
Majority of these men have been identified of South Asian heritage and are in the age range of 20s-30s. The CFSEU-BC points out that these gangsters are transient so it is of vital importance that the anti-gang task force collaborate with other agencies.   

BC's anti-gang task force issues a public safety warning about 11 men with ties to gangs

Man scammed while searching for a rental property online

Man scammed while searching for a rental property online
In three separate instances, the identity theft victim was contacted directly by potential renters regarding his Craiglist ads. One of these potential renters even sent copies of a fake driver’s licence and a fake passport which had been sent to the potential renter as part of the Craiglist scam.

Man scammed while searching for a rental property online

Lawyer denies child pornography claim in Todd case

Lawyer denies child pornography claim in Todd case
Joseph Saulnier told the jury in Aydin Coban's B.C. Supreme Court trial Wednesday there was evidence that a video titled "AmandaTodd.wmv" was played on a device seized from his client's home, but it was not stored as a data file.

Lawyer denies child pornography claim in Todd case

B.C. boosts rebate for electric vehicles

B.C. boosts rebate for electric vehicles
The price cap to determine eligibility for vehicle rebates in B.C. remains at a maximum of $55,000 for compact and full-sized cars, but the Energy Ministry statement says a second category is being added to support those requiring larger EVs, such as soon-to-arrive minivans, sport utility vehicles and pickup trucks.

B.C. boosts rebate for electric vehicles

B.C. premier says he may place ad for health cash

B.C. premier says he may place ad for health cash
Horgan says the advertisement worked for Janet and Michael Mort, who now have a family doctor after months of searching, leading him to possibly employ the same tactic after previous failed attempts to secure more federal health dollars.

B.C. premier says he may place ad for health cash

Excel Career College expands opening 2 new campuses on Vancouver Island

Excel Career College expands opening 2 new campuses on Vancouver Island
Over their history, Excel has achieved this success by developing extensive relationships with employers across key industry sectors throughout the province and bringing on faculty and guest lecturers with real-world experience.

Excel Career College expands opening 2 new campuses on Vancouver Island