If you feel like your budget is still strained, you’re not alone. A major economic forecast says it might not get much better in the near term.
Deloitte’s Economic Outlook Summer 2024 predicts Canada will not see another interest rate cut this summer and B.C.’s economic growth will remain weak, for now.
“After three years of economic upheaval, the Canadian economy is beginning to settle down,” the report explained, adding that Canada is turning a corner, but hurdles remain amid signs of recovery.
When it comes to your personal finances, the report suggests the central bank will not make any more cuts to interest rates until the fall.
“The Bank of Canada will hold off until September for a second rate cut and then move again in December. Rate cuts are expected to continue throughout 2025 before the overnight rate settles at a neutral level of 2.75% by the end of next year.”
And with so many households struggling with indebtedness, Deloitte forecasts B.C.’s economy will see weak growth for the rest of 2024 as “highly indebted households pare back their spending in the face of rising debt servicing costs.”
Deloitte says there is “reluctance to make major purchases, housing affordability remains a challenge, and savings rates are well above normal.”
However, the report does offer some light at the end of the tunnel, predicting the provincial economy could rev up in 2025.
“As interest rates fall over the next 18 months, a boost in consumer spending and housing construction will help lift provincial GDP growth to 2.9% next year after growth of just 0.7% this year.”
But while lower interest rates should encourage households to spend and businesses to invest, the report cautions there are still risks to the economic outlook in the form of geopolitical tensions and the possibility that inflation and interest rates won’t fall as expected.