The Bank of Canada says more businesses than usual are expecting sales to fall as most businesses and consumers anticipate a recession over the next 12 months.
The central bank released its fourth-quarter business outlook and consumer sentiment survey on Monday, providing insight into how high inflation and interest rates are affecting Canadian consumers and businesses.
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More companies are reporting demand and credit as urgent concerns, while consumers are reining in spending as interest rates rise.
Although two-thirds of companies expect a recession in the next 12 months, half of companies said they would be hiring or filling vacancies in the same period.
72 percent of consumers now expect a recession.
Canadian workers have seen their real wages fall in the face of high inflation. According to the Consumer Expectations Survey, most workers do not expect their income to catch up with inflation.
The polls also show that both businesses and consumers expect inflation to remain high in the short term, but that it will ease to the central bank’s target of 2 percent five years from now.
More than a quarter of consumers expect deflation five years from now, and many believe prices will fall as the economy recovers from supply-side shocks.
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