An analysis of Canada’s economy in 2023 and breakdown
Over the past three or four years, the global economy has taken a bit of a battering thanks to COVID-19 and efforts to bounce back from its devastating effects on trade. Today, just turning on the world news reveals stories about sky-high inflation in the UK, Germany in recession and China’s reduced growth figures. But what is happening in Canada?
The headline news is Canada’s economy is showing signs of slowing down after recent growth, due to tight labour markets, inflation and relatively low wage growth, but there are green shoots to offer some optimism.
The Job Scene: Still Solid
The talk of economists in 2022 was about Canada’s low unemployment rate. Well, the rate has stuck at around 5.0% into 2023. Most people who want a job have one, although it is forecast to rise to around 6% next year, which is historically where it usually sits. A stable job market is usually an indicator that the economy’s doing fine. A 5.0% rate isn’t just a number; it tells us that companies keep their doors open and even expand, offering people chances to earn a living.
What’s more, Canada created 250,000 new jobs from January to April 2023. That’s a lot of folks going from job hunting and claiming benefits to regular income, which is great news.
What’s the real-world impact of job growth though? Well, more jobs mean more money flowing into household budgets. When people have more money, they like to spend it, whether that be in the online casino or casinos in Ontario, in the shopping malls of Montreal or trying to keep up to date with fashion trends in the malls. When people earn more, they can spend more, which keeps the wheels of the economy turning.
The worry is that if inflation remains high and there are labour shortages, then people’s earnings will be squeezed further. The threat of an economic recession is never too far away from economists’ lips at the moment.
Paychecks Getting Slightly Fatter
People generally make more money or are forecast to receive a pay increase in 2024, which is important because everything from your morning coffee to gas for your car costs more. Wages have risen an average of 4.1% this year and should rise by 3.6% in 2024.
Remember: one way to try to offset rising costs if you didn’t get a pay increase is to claim benefits you could be entitled to, such as the working-from-home tax credit. These programs are available, so if you are in Canada, make sure you check out what you are entitled to.
Debt and Rising Prices: The Balancing Act
You’ve probably heard your parents or friends grumble about debt and how things are getting more expensive — that’s inflation for you. Although these financial hurdles can be a pain, higher salaries ease the strain, which is why wage growth is important to measure.
These price increases are a national issue that makes life hard for everyone, as inflation is often said to be a barrier to growth. Your paycheck is your armour against inflation and debt — if it doesn’t match the rate of inflation, then you and the country will begin to feel the strain even more than you do currently.
What Does the Future Hold?
Going forward, the economy is expected to slow down a bit, and the rising prices, or inflation, should start to come down. This is mostly due to careful planning and decisions the Canadian government has been forced to make, even if it makes us poorer in the short term. Due to these tight money rules, it’s getting more expensive to borrow money and harder to get credit, which is also slowing things down.
The country’s overall economic growth is expected to drop from an average of 3.4% last year to 1.7% this year, reaching its lowest point around September. Joblessness is expected to go up a bit, crossing the usual 6% level by 2024.
As for inflation, the general increase in prices should ease to about 3% soon. By early 2024, this core rate should also be around 3%. We expect it to go back down to the target of 2% by the end of 2024, which will put more dollars in our pockets to spend in the casinos and bars on the weekend.
So, as we can see, things could be a lot worse for Canadians in 2023 overall. A stable job market and higher earnings are helping Canadians keep up with increasing costs. Let’s hope the economy enjoys a strong finish to 2023 and starts 2024 off on a stable footing.
