We expect higher interest rates to cause a 10% fall in house prices over the next 12 months and an even steeper fall in residential investment. With the rest of the economy still recovering from the pandemic and benefitting from higher commodity prices, that weakness should cause GDP growth to slow sharply rather than turn negative, but the downside risks of recession are rising.
Canada Drop-In (10th May, 12:00 EDT/ 17:00 BST): We’ll be discussing the impact of monetary tightening on the economy and whether the Bank of Canada is risking a policy mistake in this special 20-minute briefing. Register now
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services