It's no secret that many Canadians have been struggling financially as of late. With the rising cost of living in Canada and interest rates, it can be hard to make ends meet at the end of the month. Unfortunately, according to a portfolio manager at Fidelity Investments named David Wolf in an interview with Maclean's, Canada could be heading into even harder times come 2019.
When it comes to the risk of an actual recession, Wolf links this to rising interest rates paired with the fact that "Canadians are more indebted than ever." As a result "the period ahead is likely to be challenging for the Canadian economy."
The chart above illustrates that the more burden placed on the economy, the weaker it will become. The trend that has been seen as of late is one expert sees as similar to past events that resulted in a recession.
"The historical relationship suggests the risk of recession in Canada in 2019, a risk that will intensify if interest rates continue to rise,” Wolf said to Maclean's.
While it isn't 100% confirmed and could likely change, if trends continue the way they are going now, the risk of higher interest rates and a possible recession will continue to rise.
Pair rising interest rates with the several devestating changes hitting local Canadian economies such as the current oil situation in Alberta and loss of GM for Oshawa and it's clear that our economy could be taking an even worse turn.
Unfortunately, only time will tell whether Canada really is headed for dark times or if somehow the country will be able to balance itself back out before hitting a major recession this upcoming year.
What this ultimately means for Canadians is to be prepared for a possibly tough year come 2019, and save where you can in preparation. While theres no way to give a 100% accurate prediction on the future of the country's economy, it's definitely better to be safe and assume the worst than be sorry.
Source: Maclean's Canada