Freeland warns of slowing economy in coming months

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Finance Minister Chrystia Freeland warned Monday that Canadians can expect an economic slowdown in the coming months.

Speaking to business leaders at a local company in Gatineau, Quebec, Freeland said that even if inflation starts to ease, the road ahead will be difficult.

“It is important, as Deputy Prime Minister and Minister of Finance, that I tell the truth about what lies ahead,” she said in French.

“Our economy will slow down as the central bank has to tackle inflation.”

WATCH | Freeland says it won’t alleviate the economic hardship facing Canadians:

Freeland says it won’t ease economic hardship facing Canadians

As she warns of a coming recession, Finance Minister Chrystia Freeland says the government has the right tools in place to get through this period successfully.

Although Freeland didn’t use the word recession, most consumers and businesses believe Canada will enter one, according to new Bank of Canada polls.

Third-quarter business outlook and consumer expectations surveys, released on Monday, show that more than half of consumers surveyed believe there is at least a 50% chance of a recession. And almost half of consumers say they buy less and buy more sale items to meet the cost of living.

Speaking to reporters after his speech on Monday, Freeland said the coming months will be “difficult economic times”.

“I’m not going to sugarcoat it and I’m not going to pretend we don’t have challenges ahead,” she said, adding that rising interest rates will have an impact as the Bank of Canada tries to curb inflation.

The annual inflation rate was 7.0% in August, the most recent figure available. Statistics Canada will release its latest inflation figures on Wednesday.

Freeland suggested that all countries will be hit by the same economic downturn.

The International Monetary Fund (IMF) last week downgraded its 2023 outlook for the global economy, warning that next year “will be like a recession” for many thanks to reactions from central banks around the world.

The IMF, the lending agency for 190 countries, said Tuesday morning that global economic growth would be a meager 2.7% in 2023, down from 2.9% they had estimated in July. The global economy grew by 6% in 2021.

The IMF said the slowdown was due to Russia’s war in Ukraine, chronic inflationary pressures, punitive interest rates and the lingering aftermath of the global pandemic.

“The worst is yet to come,” said IMF chief economist Pierre-Olivier Gourinchas.

The growth estimate for 2023 in Canada fell to 1.5%, down three tenths of a percentage point from the last estimate made in July. Canada’s growth estimate for 2022, meanwhile, fell to 3.3% from July’s estimate of 3.4%.

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