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Forecasting 2024: Insights from BDC

December 8, 2023
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As we enter 2024, BDC offers a comprehensive view of Canada’s economic prospects. In reflection of 2023, the nation showcased unexpected resilience, achieving a growth rate of 1.1%, primarily driven by robust population expansion. However, the repercussions of interest rate hikes resulted in uneven growth, notably impacting sectors sensitive to interest, such as housing.

Looking ahead to 2024, projections indicate a continued economic struggle. With the Bank of Canada holding a key rate of 5.0%, the expected growth stands at a modest 0.9%. The looming slowdown, in conjunction with elevated interest rates, presents Canada with a precarious situation. While a recession might be averted, the growth trajectory remains subdued.

The robust performance of the U.S. economy will influence the Canadian dollar’s exchange rate, fluctuating between 72 and 75 cents. Furthermore, oil prices are anticipated to range between US$70 and US$80 per barrel, with a potential early 2024 decline.

Inflation, a persisting concern, is predicted to decrease but persist between 2% and 3%, stabilizing towards late 2024. This is likely to impact critical budget items, including food and lodging, with food prices projected to increase by 4-5%.

A positive indication arises in the sphere of interest rate direction. The Bank of Canada is expected to initiate its first downward revision around June, signaling a glimpse of stability. BDC advises entrepreneurs, facing both challenges and opportunities, to emphasize sound human resource management, embrace technological advancements, and fortify financial resilience.

Despite the hurdles, BDC’s forecast for 2024 underscores the significance of strategic planning and adaptability for businesses navigating the dynamic economic landscape.

Original Source: BDC’s Monthly Economic Letter – December 2023

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