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Economic and Financial Outlook

The Intensifying Fight against Inflation Could Orchestrate a Global Recession

September 22, 2022

  • The European economy continues to bear the brunt of the war in Ukraine and its impacts on energy prices.
  • We’re expecting the US economy to expand fairly slowly in the second half of 2022, and further drops in real GDP are forecast for early 2023.
  • The Canadian economic outlook has rapidly deteriorated on the back of aggressive rate hikes by the Bank of Canada to rein in inflation.
  • We can expect Quebec’s economic strength to be shaken over the coming quarters by the difficulties faced by households, and declines in business investment and exports.
  • Just as at the national level, no province will be immune to the dampening effects of rising interest rates, elevated inflation, rapidly correcting housing markets, and a deteriorating global expansion.
  • Our own forecast for how much more monetary tightening is needed to bring inflation back down to target has also increased.