Canada has experienced sluggish economic growth in 2023, owing to rising prices and higher credit costs, which had a direct impact on the investment and consumption channels, despite the benefits of the country’s growing population. Furthermore, one cannot expect a significant improvement over the short run. Canadian households are amongst the most indebted in the world. Admittedly, their level of net wealth contributes to offset this fact, but it still implies an increased vulnerability against the backdrop of monetary tightening and a deteriorating labour market. The country’s fiscal position deteriorated during the Covid-19 crisis but, although some factors point to increased public spending, Canada will continue to benefit from a relatively favourable fiscal position amongst the developed countries, together with a low net debt.
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