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Can Canada avoid a recession?
Can we get inflation back to 2% without having to have a recession?
In the early 1980s and the early 1990s, it took a big recession to bring inflation down to earth.
But this time around, CIBC believes we have a fighting chance of avoiding an outright recession.
A lot of the inflation we saw in the past couple of years was attributed to outside shocks, the war in Ukraine, the disruption from COVID.
And that inflation has actually already moderated, leaving less of a job for a cooling in the economy to get all the way back to 2%.
We do think that higher interest rates will bring a period of negligible economic growth between here and the end of the year.
We will see the unemployment rate drift up as part of bringing wage inflation to a cooler pace.
But at the end of the day, we don&#8217;t think we&#8217;re stuck in a position where we&#8217;re doomed to have a recession in Canada in order to meet that 2% inflation target.
And that&#8217;s about as good an outlook as we can have at this point in the business cycle.

Can Canada avoid a recession?

Avery Shenfeld

Managing Director and Chief Economist

CIBC Capital Markets