BOC Survey: Half of firms expect Canada to be in mild recession over next year
In its quarterly Business Outlook Survey published on Monday, the Bank of Canada said about half of polled firms expect Canada to go into a mild recession over the next year, down from roughly two-thirds in the previous survey, per Reuters.
Additional takeaways
"79% of firms expect inflation to remain above 3% for the next two years, down from 84% in Q4."
"59% of firms expect inflation to stay well above 2% until at least 2025."
"For 5th consecutive quarter, businesses anticipate sales growth to slow; slowdown follows period of exceptional strength over the past year."
"Businesses link expectations of weaker sales growth to rate hikes, high inflation and concern over a recession."
"Although surveys were conducted before global banking stresses emerged in early March, evidence suggests business sentiment has not changed much since then."
"Firms continue to view labor market as tight, although labor shortages and wage growth pressure have eased."
"Firms expect size and pace of output prices to moderate; this suggests firms are gradually shifting closer to normal price-setting practices."
"Separate BOC Q1 survey on consumer expectations shows 20.3% of Canadians expect significant economic decline in next 12 months, 37.7% expect small decline."
"Expectations for 1-year ahead inflation fell to 6.03% from 7.18% in Q4; 2-years ahead inflation expectations drop to 4.27% from 5.14%."
"Expectations for 5-year ahead inflation have edged down to 2.92% from 3.10%."
Market reaction
The USD/CAD stays under bearish pressure and was last seen losing 0.6% on the day at 1.3437.
Author
Eren Sengezer
FXStreet
As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.
