A recession in Canada is likely imminent

Following the news that Canada’s GDP contracted by 0.05 percent in the second quarter, Oxford Economics has released a report predicting Canada’s economy will experience three further quarters of negative GDP growth. The second quarter’s contraction showed Canada’s economy had performed worse in the quarter than the consensus estimates of 0.3 percent GDP growth.

Recent economic data points (including the GDP number) and events in general have led Oxford to alter its forecasts for Canada’s economy. The firm now expects Canada to have “a slightly slower recovery in 2024” than Oxford Economics had previously predicted.

The 5 percent policy rate currently held by the Bank of Canada (BoC) will likely be its peak rate for this cycle, stated Oxford Economics. The firm expects the bank will gradually lower its policy rate during 2024 as Canada’s inflation nears its 2 percent target.

The OPEC production cuts have caused further concern for the economy, ye