Hold on to the boat, the see is getting rough! Thats pretty much what Canadian Banks believe will happen in the near future.
In anticipation of a predicted economic slowdown, Canada’s largest banks moved in lockstep during their earnings week, each putting more money aside for a potential increase in credit losses.
Although some feel the brunt of the financial pain is likely at least a year away, experts warn the higher cost of borrowing in Canada and the risk of job losses might catch up with households and drive a greater number into default.
One must not be expert in economy and not even expert in credit market to see increased inflation, department stores leaving Canada, rising cost of borrowing, restaurants and coffee shops closing, cost of fuel going up, and grocery prices going through the roof while the income stays the same.
There are more and more indications that Canadians are struggling to make ends meet as a result of inflation and the greatest increase in borrowing costs in recent memory. When we add recent job losses in the software business and retail, this indication could very soon be reality for many.
One in six Canadians reported that they are likely to fall behind on payments on a major debt or mortgage in the upcoming 60 days in the most recent edition of the Canadian Maru household outlook index, which was released on February 14. This is the highest level since Maru started measuring Canadians’ opinions on the economy and personal finances in 2020, up two percentage points from the previous month.
Canadians struggling to make ends meet
About 85% of surveyed people stated that they are more concerned about the rising costs of basic necessities like food and gas than they are about borrowing fees.
Another study conducted by Statistics Canada, released on February 13, revealed that 26% of Canadians said they would be unable to pay a $500 unexpected bill and 35% said they were having trouble making ends meet.
Will Canada slide into recession this year?
According the Oxford Economic, it’s likely that Canada has just begun a moderate recession that will endure for the majority of 2023. A combination of pandemic, geopolitical, and prevailing household debt and housing imbalances will cause Canada’s recession to be more severe than that of the majority of wealthy nations. They anticipate that the GDP would shrink by 1.3% in 2023, far less than the consensus forecast, with many key issues dominating the outlook.
BNN Bloomberg also predicted a severe recession in Canada during 2023.
Fear of Global Recession
Canada is not the only country who will possibly slide into severe recession, European countries like Italy and Germany will also most likely go into recession during 2023.
It seems like all the predictions at the beginning of COVID pandemic are about to come true. Many have warned that after the pandemic, a severe inflation and recession will follow.