Canada's economy is expected to slowdown through 2024 and into 2025

Canada's economic outlook is complex, with mixed signals indicating both challenges and opportunities. 

While economists don't predict an imminent recession, there are concerns about a potential downturn. Economic growth is expected to slow through 2024 and into 2025, primarily due to reduced consumer spending and higher mortgage rates. Unemployment has risen to 6.4% and could reach 6.9% by 2025, driven by factors like the slowing pace of inventory growth and lower-than-expected investments.

Despite these challenges, there is optimism for a rebound starting in 2025, with forecasts of rate cuts by the Bank of Canada potentially stimulating the economy. A significant increase in immigration has affected GDP per capita, even as total output per person rises. This rapid population growth, combined with the ongoing impact of higher mortgage rates, is contributing to Canada's economic slowdown.

However, falling interest rates and potential increases in distressed home sales could offer opportunities for financially prepared buyers, with home prices projected to drop by about 5% by the end of the year. Overall, while the economy is in a rough patch, the long-term outlook remains cautiously optimistic.

This blog was inspired by and based on the article "Is Canada in recession? Economist weight in on the economic slowdown" from Canadian Mortgage Trends.