How strong of a recession will Canada experience? And how will it unfold in BC...

Deloitte which is a conglomerate of globally independent firms—that collaborate to provide audit, consulting, financial advisory, risk management, tax, and related services to select clients—recently published their 2023 global economic outlook which calls for a slight recession. 

Specifically Deloitte had this to say:

"Despite the expected pause in interest rate increases, mortgage rates will remain elevated until the end of 2023, preventing many prospective homebuyers from entering the market and leading to further declines in home ownership transfer costs and renovations. Businesses looking to invest are also facing higher borrowing costs, acting as a headwind to their spending.

Traditionally, recessions are associated with job losses and cautious business decisions when it comes to growth and payroll, however this is not the case for the labour market outlook. Given the tight labour market conditions employers are expected to be reluctant to let go of their employees as it might be difficult to find people to fill those vacant positions once the economy begins to recover through 2024.

...The economic outlook remains clouded in uncertainty. The biggest risk to the outlook is that past interest rate increases may be more impactful than anticipated, leading to a deeper and more protracted global downturn. Scenario analysis that accounts for upside and downside risk to the economic outlook allows companies to assess how revenues and profits could change under different circumstances."

Click Here For Deloitte's Full Economic Outlook

Focusing in on Canada Global News reports that Deloitte see's a challanging six to nine month period for many Canadians: 

"Estimating that the country’s gross domestic product declined 2.2 per cent in the last quarter of 2022, Deloitte is now calling for a further contraction of 3.4 per cent and 1.6 per cent in the first two quarters of 2023.

“Overall, it’s going to be a relatively challenging next six to nine months for many Canadians,” said Trevin Stratton, America economics leader and partner at Deloitte Canada."

Despite these challanges Delloittte "expects growth to return midway through 2023."

Calling out the Bank of Canada's rate increases and inflation as primary driving factors for inflation Deloitte had this to say to Global:

"...the Bank of Canada raising its benchmark interest rate more than expected [is] driving the more pronounced recession. Other central banks around the world have also been ratcheting up their respective rates, which Stratton said is expected to lead to a global “cooldown” that could see knock-on effects for Canada.

“Specifically with our largest trading partner, the United States, seeing a slowdown going forward too, that’s going to have a big impact on the Canadian economy,” he said.

Central banks in both economies have been “aggressive” with interest rate hikes, the report noted; the Bank of Canada raised its policy rate 400 basis points to 4.25 per cent in 2022, one of the fastest tightening cycles in its history.

Amid the forecast slowdown, Deloitte expects inflation to slow “sharply,” easing to 2.9 per cent by the final quarter of 2023."

Click Here For Global's Full Report

Focusing in on BC speifically Daily Hive's Venture imprint has the following to report:

"As for BC, the economy is expected to enter a recession due partly to its extraordinarily high debt levels. The real GDP growth in BC was a strong 6.2% in 2021. It slowed considerably to 3.8% in 2022. Looking to the future, it’s expected to be -1.3% in 2023. The same is forecasted for both Ontario and Quebec. Then, in 2024, the BC economy should be up again as real GDP growth is forecast to be 1.8%.

The report added that the impact of the housing market downturn will be more pronounced in central Canada and BC thanks to Ontario and BC having the most expensive housing markets and, in return, the highest debt burdens."

Click Here For Venture's Full Article

 For more information on how 2023 may impact your local housing market reach out to us today. We would be happy to help!