fbpx

2023 Economic Outlook: The BDC Is Reassuring

Autosphere » Dealerships » 2023 Economic Outlook: The BDC Is Reassuring
No economic panic predicts BDC. Adobe Stock photo

While indicating that the economic climate is uncertain, the Business Development Bank of Canada (BDC) does not predict a recession in 2023, but rather an economic slowdown and an adjustment in consumer habits.

In a webinar broadcast on November 25, Pierre Cléroux, Vice-President Research and Chief Economist at BDC, began by explaining the current state of the economy.

“We experienced a strong recovery from the pandemic supported by government assistance programs, a vibrant labor market and consumers with access to significant savings. During the same period, business investment was very strong and we saw growth in our exports. Canada has also benefited from the rising value of commodities, of which we are major producers.”

That being said, this overheated economy fueled by a historically low unemployment rate is having the effect of driving up consumer prices. In a Canadian job market where one million positions remain unfilled, wages have also grown significantly.

“The Bank of Canada’s rate increase is a direct response to the inflationary situation we have been facing The resulting increase in interest rates is a direct hit to the purchasing power of Canadian households. “The rising interest rates charged on mortgages are taking money away from them. And many will delay or reconsider some purchases of durable goods.” The economist is talking about homes, but also furniture and automobiles that require financing.

The increase in input costs is also penalizing for many companies that cannot necessarily easily pass on this increase to their customers.

The coming year

While the economic horizon for 2023 is darkening, Mr. Cléroux does not foresee a storm on the order of those experienced in 2008-2009 or 2020 as a result of the aftermath of the pandemic. “The economy is not going to collapse,” he predicts. Our economy is still strong and we have more tools to control it. There won’t necessarily be a recession in 2023, but we’re looking at very low or no growth over the next 12 months. There will be a reduction in spending by Canadian families, however there is still money in our economy.”

According to BDC’s chief economist, the Bank of Canada’s policy rate is expected to continue to rise next year to about 4.5% and then begin to fall in the spring of 2024. The reduction in consumption caused by more expensive access to financing should help control inflation.

Prepare for the worst

The BDC webinar was also designed to showcase its support for Canadian businesses so that they can better position themselves to weather the economic downturn. This review of financial practices to deal with uncertainties requires the preparation of a budget, as a team, including performance indicators that will alert the manager to any anomalies compared to expectations.

It is recommended to prepare various financial scenarios for the worst case scenario. Close and regular monitoring of results against targets will indicate when adjustments to forecasts are necessary. According to Nicolas Fontaine, senior business advisor at BDC, a company’s management must regularly question its priorities and be proactive rather than reactive.

The BDC offers entrepreneurs several tools to validate the health of their business and prepare it to face any turbulent period on its website, bdc.ca, under the articles and tools tab.

 

AAPEX 2022 Button

SEMA 2021 Button

GTE 2022

Popular Posts

Calendar

february

03febAll Day28AutoAide : Not Too Late to Register For 2022-2023 Training

07feb4:00 pm5:00 pmFree Service Technician Webinar from ASE: Introduction to Lab Scopes

15febAll DayCADA Summit 2023

17febAll Day26CIAS Canadian International AutoShow