April 20, 2023
Canada’s small and medium enterprises remain optimistic that the economy will improve but remain challenged by high inflation.
The cost of doing business continues to be elevated, although the latest Main Street Quarterly report by the Canadian Federation of Independent Business (CFIB) does show a feeling that inflation is moderating.
“While inflation is still too high, the quarter-over-quarter annualized rate of core inflation is forecasted at 2.8% for Q2. This is within the Bank of Canada’s 1% to 3% target range and therefore supports its decision to pause interest rate hikes,” said Simon Gaudreault, CFIB’s chief economist and vice-president of research.
However, he added that the recent decision by OPEC+ to cut oil production may add further costs to energy bills.
Private investment is forecasted to contract by -4.7% in Q1 and -1.5% in Q2, reflecting the challenging financial environment for small businesses.
Crucially, most respondents believe that a recession will be avoided in the first half of 2023, with a growth rate of 2.5% in Q1 and 1.2% in Q2. This is at odds with some economists’ expectations.
