Opinion: Investor sentiment is swinging from gloom to cautious optimism, and the season of negativity is on the wane, David Olive writes.
Can we avoid a recession this year? It now appears possible that we can, though the odds still favour a brief and mild downturn.
The inevitability of a 2023 recession in Canada, the U.S. and Europe became the conventional wisdom. And it remains so, albeit with some upbeat forecasts beginning to poke through. in the latest reporting periods in Canada and the U.S., amid high-profile layoffs that have been concentrated in a bloated tech sector.
Inflationary supply-chain disruptions have eased, unwinding the spike in goods prices caused by elevated shipping costs. Inflation has already fallen, of course, to a current annual rate of 6.3 per cent from last summer’s peak of 8.1 per cent.Canadians can take credit for that with their careful spending and saving.
After all, even the gloomiest forecasts have called for a stretch of only minimal negative economic growth in 2023. For the year as a whole, the forecasters expect positive GDP growth ranging from 0.5 per cent to 1.5 per cent.GDP growth this year will be modest, but it will be growth nonetheless despite less-than-ideal conditions, notably continued high interest rates.The resolve of the Bank of Canada and other central banks to crush inflation is not to be doubted.
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