A mere decade after the last devastation, a global recession in 2019 is more likely than one might expect – and such a wide-scale downturn will particularly make itself felt in Canada, Gluskin Sheff + Associates chief economist and strategist David Rosenberg warned.
“Nothing is inevitable, but the risks of recession for Canada for next year are higher than a lot of people think,” Rosenberg told BNN Bloomberg.
And while next year’s potential recession will most likely not reach the nadir of the late 2000s, Ontario’s new Conservative government might hinder a coordinated response among Canadian policymakers wishing to give the national economy a boost.
“The fiscal side will be a wash. There will be stimulus from Ottawa, restraint out of Queen’s Park [in Ontario],” Rosenberg cautioned.
Read more: What to expect in 2019
More importantly, Canada’s current total debt load of around $2.2 trillion will make dealing with a new global recession difficult.
“This drag on debt service, just for the household sector is going to drain GDP next year,” Rosenberg said, predicting that higher debt servicing costs could reduce GDP growth next year by as much as 75 basis points.
Also, slowdown in housing price growth (especially in Toronto and Vancouver) along with the slackening petroleum and auto manufacturing sectors will work together in pulling down Canadian economic performance.
“All the shocks to the Canadian economy are to the downside,” Rosenberg stated.