Canada’s prospects of being plunged into recession are dim, unless ‘another shoe’ drops, National Bank CEO says
National Bank of Canada Chief Executive Officer Louis Vachon doesn’t see much prospect of a Canadian recession in the next six to 12 months — barring unforeseen circumstances.
“There needs to be another shoe to drop somewhere,” Vachon said Wednesday during a conference his bank hosted in Montreal. “There has to be further tightening by the central banks in North America, which appears to be unlikely at this stage, or some kind of macro-economic or geopolitical accident, which as you know is almost impossible to predict.”
While financial-market indicators of recessions are beginning to flash red and Canadian economic growth nearly stalled at the end of 2018, signs of strength remain. The nation’s labour market, for example, is off to a roaring start this year.
“I don’t have a forecasting machine,” he said. “All I can say is when I look specifically at Canada and in Quebec, where we have even better visibility, the job market remains very, very positive.”
Vachon also sees Quebec’s economy as faring better than the rest of Canada, helping justify the Montreal-based lender’s focus on the largely French-speaking province.
“Consumer sentiment in Quebec is the strongest in the country right now,” the chief executive said, adding that National Bank’s economists are forecasting growth in the province to be “slightly better” than the Canadian average in the near term.
He said the “slightly expansionary” debut budget last week from Premier Francois Legault’s finance minister means consumers in the province “will have a little bit more money in their pockets” and that the government has room to react with fiscal stimulus in the event of a recession.