Canada: 2023 Article IV Consultation-Press Release; and Staff Report
IMF Staff Country Reports, July 27, 2023
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Bibliographic details
- Published: July 27, 2023
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400249891.002
Macroeconomic outlook and near-term risks
- The Canadian economy is decelerating.
- The outlook is uncertain and shocks could push the economy into a mild recession.
- Risks to a highly open economy like Canada are substantial and compound domestic vulnerabilities related to:
- inflation expectations,
- the housing market,
- household balance sheet/advantage.
Inflation and labor market
- Headline inflation has shown a sharp decline.
- Core inflation has been stickier.
- Short-term inflation expectations remain elevated.
- Labor markets are described as still-tight, supporting inflation persistence.
Financial system resilience and vulnerabilities
- The financial system appears broadly resilient despite:
- global banking stresses,
- ongoing mortgage resets at higher interest rates.
Housing market and demographics
- The housing market is rebounding again.
- The rebound partly reflects the substantial increase in immigration.
Structural and long-term considerations
- The government is positioning Canada as a reliable supplier of critical minerals and energy.
- Canada has had some success in attracting some major new green investments.
- Key long-term challenges:
- further strengthening the investment climate,
- boosting productivity growth,
- implementing Canada’s ambitious policies to achieve its climate mitigation targets.
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