Canadian Outlook

Inflation is proving to be a stickier problem for all concerned. Fed by pandemic-spending on goods rather than services, inflation has been inflamed by war in the Ukraine and supply chain disruptions.

Higher commodity prices are a saving grace for primary producers in Canada, boosting profits, but other sectors will have to cope with higher borrowing costs and slower export growth to the U.S.

Central banks worldwide have had to accelerate their rate hike plans while still hoping to negotiate a tricky soft landing for their respective economies. We are not expecting an economic contraction in Canada, but the risks are creeping up.

Interest rate hikes have finally tipped the overheated housing market over the edge. Prices are on their way down, and starts will ease from recent highs.