Canadian economy set to see positive growth in first half of 2024 – forecast

The CFIB releases its latest Main Street Quarterly report

Canadian economy set to see positive growth in first half of 2024 – forecast

Canada’s economy will be seeing positive growth in the first two quarter of the year, according to a recent report released by the Canadian Federation of Independent Business (CFIB).

In its latest “Main Street Quarterly” report, the CFIB said that as the economy had rebounded to 0.8% in the first quarter of 2024, it will see a 0.9% year-over-year growth when the second quarter rolls around.

“All eyes were on the Bank of Canada this week ahead of its monetary policy decision on Wednesday. As widely expected, the Bank took a wait-and-see approach for a sixth consecutive time and didn’t announce any rate cuts. With more signals showing that inflation is generally getting under control, there’s bigger pressure on the Bank to lower rates in the near term,” said Simon Gaudreault, CFIB’s chief economist and vice president of research.

The report also found that the Consumer Price Index (CPI) inflation continued to decrease in Q1 2024 and is expected to continue the trend in the second quarter. Private investments continued the decline for the third consecutive quarter in Q1 and is expected to continue to do so in a much slower pace in the second quarter.

The job vacancy rate for the private sector had reached 3.5% in the first quarter of 2024, amounting to about 496,700 unfilled positions. CFIB noted that the insufficient demand was at the highest level since the pandemic, which affected half of small and medium enterprises (SMEs). Such businesses took a more cautious route when it comes to their plans for price increase.

“The Bank’s restrictive policy is not going to help SMEs in the next few months as they’re continuing to face headwinds as shown by a decrease in investment and a high level of insufficient demand,” said Gaudreault.

When it comes to transportation businesses, it was found that they had the highest exit rate seen in the last 10 years as issues concerning labour shortages and cost constraints plague the market. The industry’s long-term confidence level was also reaching the lowest levels seen since the pandemic.

“Our forecasts suggest that the economy will see positive growth in early 2024. However, business owners remain modestly optimistic about the future of their business and will be watching the upcoming federal budget closely for any sign of meaningful cost relief, as well as the start of widely anticipated interest rate cuts in the upcoming months that could improve sales and lower financing costs,” said Gaudreault.

The Canadian Federation of Independent Businesses is an association for small and medium-sized businesses. It has 97,000 members across every industry and region.