Canadian businesses are forecasting a milder recession in 2023, according to the Bank of Canada’s first-quarter survey. The report revealed that approximately half of the respondents expect a mild recession over the next year. This is lower than the two-thirds of respondents who expressed concerns in the previous quarter.
The survey results suggest that Canadian businesses are relatively optimistic about the country’s economic prospects. However, there is still some uncertainty, as the economy continues to grapple with the aftermath of the COVID-19 pandemic. The pandemic-induced recession has had a significant impact on the Canadian economy, and many businesses are still feeling the effects.
Despite the overall optimism, there are some areas of concern. For instance, firms are bracing for inflation to remain above 2% until at least 2025. This is not surprising given that inflation has been on the rise in Canada and other countries in recent months.
Inflation Concerns Linger
According to the Bank of Canada survey, most Canadian businesses are concerned about high inflation. Approximately 79% of respondents expect inflation to remain above 3% for the next two years. While this is down from 84% in the fourth quarter, it still indicates significant inflation concerns.
There are several factors contributing to inflation in Canada, including supply chain disruptions, increased demand for goods and services, and rising energy prices. These factors are not unique to Canada, as many other countries are experiencing similar challenges.
Despite the challenges, the Bank of Canada has indicated that it is committed to keeping inflation under control. In a recent speech, Bank of Canada Governor Tiff Macklem stated that the central bank is “fully committed to keeping inflation low, stable, and predictable.” Macklem also noted that the Bank of Canada is closely monitoring the economy and is prepared to take action if necessary to support economic growth and stability.
Overall, Canadian businesses are cautiously optimistic about the country’s economic prospects. While concerns about inflation persist, there is hope that the economy will continue to recover from the pandemic-induced recession.