What Happened to the Roaring Twenties?

Ottawa, July 12, 2022 –The Conference Board of Canada has released a two-year economic outlook that forecasts Canada’s real gross domestic product (GDP) will grow 3.5 per cent in 2022, easing to 2.6 per cent in 2023, a decrease from the March 2022 projections. Interest rate and price escalation, along with sharply slower growth in the United States are contributing to the pullback. A recession is not in the forecast, but the risks are rising.

“Inflation is proving to be a stickier problem and has been inflamed by the war in Ukraine as well as supply chain disruptions which compounded the pandemic-spending on goods rather than services,” said Ted Mallett, Director, Economic Forecasting, The Conference Board of Canada. “Despite this, Canada’s economy is still running a few percentage points under its capacity and we’re seeing a commodities price surge which has spurred energy and agriculture production.”

Central banks globally, have had to accelerate their rate hike plans while still hoping to negotiate a tricky soft landing for their respective economies. The Bank of Canada lifted its target for the overnight rate by 50 basis points at its June meeting, as it continues its “quantitative tightening” policy under which it reduces the holdings of maturing Government of Canada bonds it purchased to support the economy during the pandemic. The Conference Board of Canada expects the fourth interest rate increase of 2022 in July, to be followed by additional increases in September, October, and December. Another bump-up is anticipated for January 2023.

Tough times are ahead for many, including Canada’s housing sector which has seen interest rate hikes result in decreasing prices. Markets began this year with heavy demand outpacing housing supply. Homebuyers were lured by low interest rates, solid employment increases, and illusions of persistent price appreciation. Strong population growth was, and remains, another market spur. Investors late to the party, unfortunately, with heavily impacted mortgages will be bearing the brunt of impacts, and an increase in defaults and bankruptcies can be expected.

Globally, the war in Ukraine has added to the existing inflationary pressures. Energy and food prices have surged as supply chain disruptions have increased. China’s zero-COVID policy, which led to a severe lockdown in Shanghai, has added to the supply chain challenges, although this situation appears to be easing. The Conference Board of Canada expects the world economy to expand by about 3.0 per cent this year, with a similar gain anticipated in 2023.

The U.S. economy may be headed towards a recession as stock markets have been trending downward and consumer confidence has lagged, but is not a foregone conclusion. Several factors could mitigate this, as consumers are dealing with low debt-to-GDP burdens, and many have locked into record-low interest rates over the past several years by refinancing their mortgages. Households south of the border have also built-up significant savings during the pandemic, with some using these to keep spending despite the price increases. The Conference Board of Canada projects real GDP in the U.S. to expand by 2.4 per cent this year and 2.1 per cent in 2023.  

Oil prices have remained a positive trend since the onset of the war in Ukraine and subsequent Western sanctions on Russian energy. While we expect prices to come down over the near term, they will remain elevated as the war and sanctions spill over to 2023. The surge in oil prices has already proven favorable for investment in the oil and gas sector. Capital spending in the energy extraction sector rose by 7 per cent during the first quarter of 2022, reaching 93 per cent of its pre-pandemic level. Over the last few months, many producers increased their 2022 capital spending guidance to benefit from high oil prices.

The federal government has moved to the next phase of its pandemic recovery plan, which will be a more hands-off approach with more targeted measures as the government looks to support Canadians and the economy without adding to debt levels. The spending increases announced in the most recent federal budget, and an improved revenue outlook—in part due to new taxes on financial institutions and foreign corporations operating in Canada—helped the federal government project an improving deficit over the next several years. Similarly, a higher-than-expected revenue forecast from the provinces and territories has led to increases in budget spending targets.

The full forecast is available for subscribers, here. Media should contact media@conferenceboard.ca for access.

About the Conference Board of Canada:

The Conference Board of Canada is the country’s leading independent research organization. Our mission is to empower and inspire leaders to build a stronger future for all Canadians through our trusted research and unparalleled connections. Follow The Conference Board of Canada on Twitter @ConfBoardofCda.

Media Contacts

For all requests, including reports and interviews, please contact:



*From 8 a.m. to 5 p.m. ET; after hours, please send an e-mail.

Woman examining data on computer

Access our research

Access to the Conference Board’s reports is free of charge to professional journalists upon request.

Access our experts

Our experts are available to share research insights. Contact us.