“The year 2024 promises to be more difficult for the Quebec economy,” anticipate analysts from the Autorité des marchés financiers du Québec (AMF), in their Economic and Financial Review published Friday.
“The fall in real GDP in the second quarter, which surprised by its magnitude, seems to indicate that Quebec is starting to exhaust the assets that have made its economy relatively resilient in recent quarters,” observe AMF analysts.
And then ? “The effects of the tightening of Canadian monetary policy [raising interest rates] have been felt for some time now, but they will be even more noticeable in the months to come,” predict AMF analysts.
“In addition, the slowdown in the global economy means that demand for Quebec products risks decreasing. »
After having “deteriorated abruptly in the second quarter”, the Quebec economy could be “at the start of a period of contraction which would extend until the beginning of 2024”, estimate Desjardins economists in the update of their Economic and Financial Forecasts, published Thursday.
“Real GDP [in Quebec] fell by 1.9% [over one year] in the second quarter following growth of 1.4% in the first quarter,” report Desjardins economists.
In the second quarter, “household consumption spending declined for the first time since the start of the pandemic. Also, the residential sector continued to fall, and business investment declined.”
Consequently, “economic conditions [in Quebec] are expected to remain difficult over the coming quarters, particularly due to the restrictive effects of high interest rates,” warn Desjardins economists.
Also, “the job market, which has held up fairly well so far, is expected to deteriorate. The unemployment rate measured at 4.4% in September is expected to rise to around 5.5% by next spring. »
The sentiment of business leaders and consumers towards developments in the economy is deteriorating to a level that is a precursor to recession, estimate National Bank economists in their weekly analysis post published Friday.
Among other things, in the most recent Business Outlook Survey (BPS) released by the Bank of Canada, National economists note “a deterioration in operating conditions [for businesses] in the third quarter, while the indicator The overall EPE continued to sink below 0, to a level usually associated with periods of recession.
Consequently, according to economists at the National Bank, “ambient pessimism and rising interest rates are pushing households to reduce their spending.”
Despite the increasing signs of slowdown, a recession could still be avoided in the coming months, predict analysts from the Canadian Federation of Independent Business. CFIB is considered the leading voice for SMEs in the country.
In the update of their Business Barometer, published Friday, CFIB analysts note that the observations of SME managers are in the direction of “weak growth” of the economy in the third quarter, of the order by just 0.2% in annualized terms. (GDP figures for the quarter ended September 30 are expected soon from Statistics Canada.)
On a more optimistic note, the CFIB Business Barometer update suggests that “GDP growth in the fourth quarter [October 1 to December 31] could rebound slightly to 1.4%, which could allow to avoid a recession.”
“Although GDP growth is below the historical average of around 2.5%, these forecasts indicate a resilient economy despite the difficult context,” report CFIB analysts.
