Canada’s economy is largely expected to rebound this year, but a recent report suggests Canada could fare worse than similar countries in 2024 due to high levels of household debt.

An Oxford Economics report projects interest rates will come down in late 2024 as Canada experiences a “modest recovery.” But the researchers cautioned that the bounce-back will fall below consensus projections and “worse than other advanced economies.”

“One of the reasons we think Canada is going to have a recession and the U.S. might avoid one is because we have highly indebted households that are very dependant on the housing market and the economy and those impacts are flowing through now,” Tony Stillo, Oxford Economics’ director of economics for Canada, told BNN Bloomberg in Wednesday interview.

Overall, the December report suggested that Canadians will remain reluctant to spend even as interest rates come down.

It also predicted immigration will help the labour market, but hurt the country’s housing supply.

“(Immigration) will benefit the economy,” Stillo said in the interview. “What we’re seeing is that it adds to the labour supply, but it takes a while for newcomers to fully settle into the economy, so that benefit for the economy in terms of higher actual GDP will be a few years away,”

Stillo doesn’t expect elevated immigration figures will impact home prices, as newcomers typically rent for a few years when they first arrive in the country. That means rental prices will be squeezed, but home prices shouldn’t feel the effects, he explained.


Stillo said he expects governments will come up with smaller measures to fight economic slowdown in order to avoid stoking inflation.

“What we’re expecting to see is modest targeted measures like you’ve seen to date, whether it’s the exemption from the carbon tax for home heating fuel, the GST exemption for purpose-built rentals, the grocery rebate, things of that nature,” he said.


If Canada wants to get back on the right track, it needs a boost from businesses, Stillo said.

“We’ve had lacklustre business investment for some time, what we need to see is higher investment by businesses (and) government as well in terms of the infrastructure that supports growth, and then you’ll see that benefit in terms of higher productivity,” he said.

“We have to improve our capital investment per worker, per person, and then we will hopefully get that benefit in productivity and higher living standards.”