Experts previously predicted that Canada would experience a recession this year, but according to Bank of Montreal CEO Darryl White, the country isn’t in any danger of that in 2019.
“Are we experiencing some slowdown? Yes, but let’s pay attention to the rate of change… It’s moderating, it’s not a screeching halt,” White told reporters on Tuesday, after an annual BMO shareholders meeting. “And when we look at employment rates, we look at inflation, they don’t line us up to driving ourselves towards a recession.”
White said he predicts the country’s GDP growth will be roughly 1.5 per cent at the end of this year.
Canadian consumer loans and mortgages have moderated, but that’s “healthy and expected,” White also noted. Although the housing market is dwindling in some provinces across Canada — mainly B.C., Alberta, and Saskatchewan — other cities are helping to balance out the country’s economy. Toronto’s market is “steadying,” and Ottawa and Montreal markets are strong.
“You really have a diverse set of circumstances when you go across the country,” White said. “On a blended basis across Canada, are we going to see a slowing consumer mortgage portfolio? For sure, relative to what we would have seen last year or the year before. But still growing.”
David Wolf, a Fidelity Investments portfolio manager, predicted in December that Canada was at risk of a recession due to rising interest rates and household debt.
“The higher [Canada’s mortgage interest] burden, the weaker the economy will tend to be,” he told Maclean’s. “The historical relationship suggests the risk of recession in Canada in 2019, a risk that will intensify if interest rates continue to rise.”
Interest rates and household debt have been on the rise for years, but the latter is growing at the slowest pace in 36 years. In 2018, household debt grew by just 3.5 per cent year over year.