Economic and Financial Outlook

Risks Ratchet Up as High Inflation Persists

October 24, 2022

Jimmy Jean
Vice-President, Chief Economist and Strategist

Europe’s ongoing energy crisis will soon pull many countries into recession.
Real GDP started the year with two straight quarterly declines, but it’s expected to grow in the third quarter. The longer-term outlook is gloomier, however.
The Canadian economy continues to show signs of weakness as borrowing costs grind steadily higher. The Bank of Canada is expected to hike by another 100 basis points before the end of the year.
In Quebec, real GDP growth slowed sharply in the second quarter, clocking in at an annualized rate of just 1.0%. Real GDP by industry was down for the third month in a row, a sign that the economy is losing steam. Based on this weaker‑than‑expected data, we’ve downgraded our forecast.
Other provinces’ outlooks remain divided according to housing market exposure and commodity production.

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