Canada Avoiding a Recession

Despite global trade tensions, “dismal” low productivity, high personal debt and worries about consumer confidence, on balance, Michael Gregory the deputy chief economist and head of U.S. economics at BMO Capital Markets, does not see Canada slipping into a recession.

“We’re going to skirt recession,” Michael Gregory said at a conference in Toronto. He held out several reasons for his claim:

1. He doesn’t believe there will be an increase in protectionist policies because the worst effects from new tariffs imposed by the U.S. on some important goods and commodities have yet to hit American consumers.
2. Canada’s steadily growing population, which is fueling residential construction to provide a moderate increase in both investment activity and productivity.
3. Canadian personal debt levels did decline while fears of interest rate hikes were on the minds of consumers, but they are rising once again. 
4. He doesn’t see Canada’s growing federal deficit is a major concern. Canada’s debt to GDP has been quite stable at around that 30 per cent mark for some time, and the Feds can currently borrow fixed, long-term money at about 1.5 per cent interest: “You can do a lot on infrastructure, you can do a lot on other programs with that kind of money.”
5. Consumer confidence is key. Gregory said the way consumers respond to local and global events will be the ultimate decider.

Reference: https://renx.ca/canada-skirt-recession-bmo-michael-gregory