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

Man pleads guilty to Langley triple homicide

Man pleads guilty to Langley triple homicide
The homicide team says in a statement that Kia Ebrahimian pleaded guilty to three counts of second-degree murder in B.C. Supreme Court on Monday. Police were called to a Langley house fire on June 13, 2020, and found the bodies of the man's mother Tatiana Bazyar, his brother Befrin Ebrahimian and Francesco Zangrilli.  

Man pleads guilty to Langley triple homicide

Dental benefit may not reach families who need it

Dental benefit may not reach families who need it
The federal government plans to send cheques of up to $650 to qualifying low- and medium-income households to help pay for children's dental needs through the same platform used for Canada Child Benefit payments. That is run through the Canada Revenue Agency, which the experts suggest could be a problem because many low-income families are less likely to file tax returns.

Dental benefit may not reach families who need it

Arrests are 'futile' to curb crime: B.C. minister

Arrests are 'futile' to curb crime: B.C. minister
Murray Rankin says fighting crime by arresting more people is "futile," and the government is instead considering a range of options to keep people safe. Opposition Liberal Leader Kevin Falcon told the legislature that the government has continued a "catch-and-release" policy where repeat offenders are quickly freed from custody despite being accused of violent crimes.  

Arrests are 'futile' to curb crime: B.C. minister

Crews battle wildfire in B.C. regional park

Crews battle wildfire in B.C. regional park
A Twitter account for the district's emergency services division had posted on Saturday afternoon saying the fire was "under control and not spreading," but on Sunday the BC Wildfire Service's website lists the blaze as out-of-control. Videos posted online by the district show a helicopter dumping water on the fire.

Crews battle wildfire in B.C. regional park

B.C. to bring in new rules for mortgage brokers

B.C. to bring in new rules for mortgage brokers
Finance Minister Selina Robinson introduced the bill in the legislature on Tuesday, saying B.C. residents deserve better consumer protection and more transparency in the mortgage broking industry. One pending change is increasing fines to a maximum of $500,000 for those caught breaking the rules, while those with more than one conviction could face fines of up to $2.5 million.

B.C. to bring in new rules for mortgage brokers

VPD releases video of mischief to Olympic Cauldron

VPD releases video of mischief to Olympic Cauldron
Just after 3:30 a.m. on October 1, two suspects were in Jack Poole Plaza for 12 minutes, and briefly approached the base of the cauldron before leaving. When they returned 30 minutes later, one approached the base of the cauldron with a tool, while the other appeared to pull out a camera to record the destruction.

VPD releases video of mischief to Olympic Cauldron