Most Canadian Companies Expect Recession in 2023: Central Bank's Report
MOSCOW (Sputnik) - The majority of Canadian companies expect a recession in 2023, according to a report published by the Bank of Canada on Monday, which is based on the results of the fourth-quarter 2022 Business Outlook Survey.
"While most firms expect Canada to be in a recession within the next 12 months, the majority of those firms think it will be mild," the report said.
Some enterprises are cutting their budgets or suspending development, the report said. Most companies cite interest rate increases as the key reason for the expected recession, as well as inflation, which reduces households’ capacity to spend.
"Firms’ short-term inflation expectations are roughly unchanged — they remain above the Bank's inflation target. As in the previous survey, respondents attribute inflationary pressures to elevated energy prices, persistent supply chain issues, high labour costs, a strong economy," the report said.
In 2023, business expects the inflation level in Canada to reach 4.5% as opposed to the Central Bank's target range of 2%. This level of inflation can only be achieved within a five-year horizon, according to the report.