For economic prognosticators, the year that just ended threw up some big surprises.
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Few, if any, forecasters anticipated these developments — a stark reminder of how hard it can be to predict where the economy is headed.Sign up to receive daily headline news from the Ottawa SUN, a division of Postmedia Network Inc.By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails or any newsletter. Postmedia Network Inc.
This has fed an alarming jump in inflation and aggravated widespread labour shortages. Spendthrift governments are part of the inflation story: both the Trudeau government and several provinces have continued to throw large dollops of money at an economy that no longer needs any “fiscal stimulus.”Article content
Economic momentum recently has been flagging amid slower global growth, rising interest rates and tumbling housing markets. The weakness is set to intensify into 2023. Canada will struggle to crank out positive economic growth this year. While we may avoid a technical recession , mainly owing to a fast-growing population, at best Canada is set for a “slowcession” as economic activity basically grinds to a halt.
Higher interest rates and steeper borrowing costs are the main reasons for the economic downturn. Both the Bank of Canada and the U.S. Federal Reserve look to be close to finishing their policy tightening after a flurry of interest rate hikes starting last March. But because monetary policy works with a lag, the economic pain from last year’s soaring interest rates will be felt over the next year or more.
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