Canadian bank expects short-lived recession

TORONTO (AP) — A report issued Thursday by the Royal Bank of Canada says the country is headed towards a recession in 2023, but it will be short-lived and not as severe as prior downturns.

RBC economists said that soaring food and energy prices, rising interest rates and ongoing labor shortages will push the economy into a “moderate contraction” next year.

“We see growth slowing into the end of this year, but remaining positive, then we expect two quarters of declining GDP in Q2 and Q3 of 2023,” RBC economist Nathan Janzen said in an interview. “It’s become the more likely base-case assumption.”

Canada will also see unemployment drift slowly higher and then slightly faster into next year, he said.