Strategic Alternatives
Productivity and affordability: Canada’s top challenges in 2025
Dec 9, 2024
Frances Donald, RBC's Chief Economist, offers keen insights into Canada's economic future as it navigates significant challenges in 2025. She discusses the stark divergence from U.S. growth and monetary policy, fueled by changes in trade dynamics and political leadership. The conversation dives into pressing issues like rising economic inequality, the impact of immigration on labor and housing, and the urgent need for effective solutions to Canada’s housing affordability crisis. Donald outlines the complex interplay between economic growth, inflation, and policy measures.
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Quick takeaways
- Canada's economic trajectory in 2025 will significantly diverge from the U.S. due to differing monetary policies and persistent structural challenges.
- Challenges in immigration policy, aimed at balancing housing demand, may negatively impact Canada's labor market and overall economic growth.
Deep dives
Navigating Economic Uncertainty in Canada
Canada's economic outlook for 2025 is characterized by significant uncertainty influenced by global events such as geopolitical conflicts and shifting U.S. trade policies. The economy is expected to experience a challenging first half due to high interest rates and rising unemployment, yet a potential easing of rates in the latter half could bring relief. Notably, Canada may experience a divergence from U.S. economic trends, marking a permanent shift in economic models influenced by fiscal policies and inflationary pressures. Economists will need to unpack a complex narrative in which Canada's structural challenges, such as low fertility rates and productivity issues, persist even as surface-level data paints a more resilient picture.
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