Canada will enter recession in the first quarter of 2023, warns Royal Bank

Canada will enter recession in the first quarter of 2023 due to the sharp rise in interest rates, anticipated by one of the main establishments financial of the Countrythe Royal Bank of Canada (RBC).

Previously, the bank had indicated that Canada would enter a moderate recession in the second quarter of 2023.

The RBC explained in an analysis that its economists anticipate interest rates Canada will be placed slightly above 4%, and between 4.5 and 4.75% in United Stateswhich will bring forward the arrival of the recession in the first quarter of 2023.

Although 2022 started with interest rates at Canada at 0.25%, the figure now stands at 3.25% after successive increases including the unexpected rise of one point in July.

At the beginning of September, the Bank of Canada raised rates again by 0.75 points, which left the index at the current level of 3.25%, in an attempt to control the growth of the inflationwhich in July stood at 7.6%.

RBC has indicated that the Bank of Canada he will stop raising interest rates at the end of 2022. But he warned that this will depend on whether inflationary pressures are brought under control.

The analysis predicts that the sector maker it will be the first to feel the effects of the economic contraction.

Rising interest rates and the inflation will reduce about 3 thousand dollars Canadians ($2,160) the median purchasing power of Canadian households in 2024, the study adds. RBC.

The contraction of the economy will also result in a increase unemployment, which RBC It is estimated that it could reach 7% by the end of next year. In July, the unemployment rate was 4.9%.

With information from EFE

Theodore Davis

"Entrepreneur. Amateur gamer. Zombie advocate. Infuriatingly humble communicator. Proud reader."

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