According to Statistics Canada, Canada’s gross domestic product (GDP) fell 1.1% in the third quarter. These figures point to stagnation in the economy, explains Benoît Durocher, senior economist at Mouvement Desjardins.
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“It’s really the restrictive effects of rate hikes that are starting to pile up,” Mr. Durocher explained in an interview on LCN on Thursday.
The rise in interest rates has therefore reduced consumer purchasing power, but has also reduced exports.
“It is [aussi] the reflection of slowing external demand. It’s the same all over the world and it was particularly reflected in Q3 in Canada. Domestic demand is weak and consumer spending is facing certain difficulties,” he added.
The idea of a “mild” recession cannot be ruled out either.
“It is not for fun that we are slowing down the economies of Canada and Quebec, but to slow the upward pressure on prices that we have been seeing for some time.” “We are on the right track, that is still the good news” says the economist.
Inflation has fallen in recent months and is approaching the Bank of Canada’s 2% target.
“The conditions are expected to be created in spring 2024 to begin gradually reducing interest rates in Canada,” estimates Benoît Durocher.
***Watch his full interview in the video above.***
Originally posted 2023-12-01 20:34:26.