In a time where tariff threats cast a shadow over economic stability, a recent Bank of Montreal survey reveals that many Canadians are feeling apprehensive about the possibility of a recession within the next year. Despite these concerns, there are still glimmers of hope on the horizon.
Key Findings from the Survey:
- 63% of Canadians are worried about a potential recession in the next 12 months.
- 48% believe the economy will weaken in the coming year, while only 19% expect improvement.
While the majority of respondents share a sense of pessimism, BMO Capital Markets senior economist Robert Kavcic reassures that the global economy is projected to grow in the upcoming year. He emphasizes the importance of acknowledging and addressing trade concerns, as they hold significant weight in shaping economic outcomes. Kavcic remains optimistic about Canada’s economic growth, predicting improvement in 2025, barring any major tariff disruptions.
The Impact of Rising Prices and Inflation:
- Over two-thirds of Canadians feel the negative effects of inflation on their financial situation.
- 44% of respondents are spending an additional $100 to $300 monthly on basic living expenses, with 38% exceeding $300 extra each month.
- 61% of Canadians perceive current inflation levels as high, with concerns of prices continuing to surge.
On the inflation front, Kavcic notes that recent data indicates stabilized price growth around the Bank of Canada’s target. He forecasts further modest interest rate reductions by the Bank of Canada throughout 2025, aiming to alleviate the financial strain caused by inflation.
Looking at the Investment Landscape:
- Last year was generally favorable for investors, despite looming economic challenges.
- Chief investment strategist Brent Joyce anticipates continued market growth in 2025, emphasizing the distinction between the Canadian stock market and the overall economy.
Joyce reminds investors that markets often overcome uncertainties, climbing what he refers to as “a wall of worry.” Despite potential obstacles such as tariffs, there are opportunities for market gains in the upcoming year.
In conclusion, the survey illustrates the prevailing concerns and cautious optimism among Canadians regarding their economic outlook. While challenges persist, there is room for growth and resilience in the face of uncertainties. As we navigate the economic landscape ahead, it is essential for individuals and policymakers to remain vigilant and proactive in addressing issues to ensure a stable and prosperous future.
This report presents a snapshot of Canadian sentiment and economic forecasts, providing valuable insights for both individuals and institutions in navigating the evolving financial landscape.
(Source: The Canadian Press, January 20, 2025, TSX: BMO).
Leave feedback about this