(Bloomberg) -- Canada will dodge a recession by a narrow margin, economists say, but elevated interest rates will keep economic growth near zero for a while.

Gross domestic product will be flat this quarter and grow at an annualized pace of just 0.3% in the first quarter of next year, according to the median response in a Bloomberg survey of economists. Both figures are a downgrade from the previous month’s survey, and project growth that’s well below the rate at which Canada’s population is increasing.

The gloomier outlook comes ahead of a Bank of Canada interest rate decision on Wednesday, when Governor Tiff Macklem and the bank’s decision-making council are expected to hold the policy rate at 5%.

 

Economists still see central bank beginning to cut rates in the second quarter of 2024, but they don’t expect to drop quickly. The median prediction is for a 4% Bank of Canada overnight rate at the end of next year, compared with previous expectations for 3.75%.

Inflation is expected to be 3.3% in the first quarter before cooling to 2.1% in the second half of 2024.

There are also fresh signs of Canadian consumers feeling pinched by inflation and higher costs for mortgages and other loans. Household consumption is expected to shrink by 0.4% in the first quarter of 2024, according to economists’ estimates. That would mean an even sharper decline in consumption per capita, in a country that’s seeing immigration drive the fastest population growth since the 1950s.

The Bloomberg survey took place from Oct. 13 to 18. 

 

--With assistance from Erik Hertzberg.

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