OTTAWA – The Bank of Canada says more businesses than usual expect their sales to decline as most firms and consumers expect a recession in the next 12 months.
The central bank released its fourth-quarter business outlook and consumer expectations surveys today, giving some insight into how high inflation and interest rates are affecting Canadian consumers and businesses.
More businesses are reporting demand and credit as pressing concerns, while consumers are cutting back on spending amid rising prices.
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Despite concerns about weakening demand, almost 50 per cent of businesses said they’re planning to add employees or to fill vacant positions over the next 12 months.
The surveys also show both businesses and consumers expect inflation to remain elevated in the short-term but expect it to ease in five years to the central bank’s target rate of two per cent.
More than a quarter of consumers expect deflation in five years with many believing prices will decrease as the economy recovers from supply-side shocks.
This report by The Canadian Press was first published Jan. 16, 2023.