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The dreaded heavy recession could be more of a soft landing, according to Scotiabank’s Chief Economist Jean-François Perrault.

Perrault headlined SIPP’s Canada’s Leading Economist event on January 25 at Delta Ocean Pointe Resort. Here are our five top takeaways from his talk to SIPP members:

1. Inflation remains stubborn

The Bank of Canada (BoC) has been aggressively exercising its role of achieving target inflation of 1% to 3% (CPI) by raising interest rates. While inflation is coming down slowly, it remains stubbornly above 6% despite the BoC’s efforts. Perrault does not see the inflation rate moving back into the 2% range until 2024.

2. The anticipated big recession looks to be more of a soft landing

The recession may not be as punishing as anticipated. While the downside is higher interest rates, Perrault said, the flip side is that perhaps the myth of a soft landing is not mythical and can actually be engineered.

3. Despite a mild recession, layoffs may not be widespread

Despite media hype about big tech layoffs in the U.S., the Canadian labour market added 104,000 jobs in December 2022. In Canada, a record-low unemployment rate has actually led to labour hoarding where employers who have spent years trying to hire the right people are now reluctant to let people go too soon. The “labour hoarding” may help Canada do better through the recession as companies reduce hours instead of pursuing layoffs, so the opportunity cost is less than having to re-hire later.

4. Canada demonstrates economic resilience during times of uncertainty

Canada’s reaction to economic adversities is another sign of resilience. Scotiabank forecasted a 3.7% GDP growth for Canada (from last January). However, an unpredictable series of events hit the world hard — the war in Ukraine, global supply-chain issues, high inflation, which led to stock market shakiness and volatility.  

Despite this impact, some issues demonstrated Canada’s economic resilience. The terrible war in Ukraine, for example, led to higher commodity prices for wheat and energy, areas where Canada happens to be a market leader.

5. Housing unaffordability and scarcity continue to be one of our region’s top issues

The Capital Region continues to experience systemically low unemployment at 3.4%. Despite this, the region has been unable to address affordability issues to attract and keep talent. This creates a necessity for Greater Victoria to embrace increased density and land use, creating a supply shock to the housing market, which drives prices downward.