ontario news watch

Recession likely amid global economic downturn, fiscal restraint needed: Carney

OTTAWA — Former Bank of Canada governor Mark Carney says a global recession is likely, making it challenging for Canada to avoid a similar economic downturn. 

While testifying before the Senate banking committee on Thursday, Carney said Canada may fare better than others because of mitigating factors such as the country’s ties to the U.S. and its strong labour market recovery from the pandemic.

A growing number of economists are now forecasting Canada will enter a recession as the Bank of Canada and other central banks across the globe raise interest rates to cool high inflation.

In response to a question about what caused high inflation in Canada, Carney said it was first set off by global circumstances but has since evolved into a domestic problem.

The former governor, who also served as the governor of the Bank of England, said rising commodity prices and supply chain issues fuelled inflation during the pandemic, but since then, inflation has broadened into more sectors of the economy.

Carney said the current economic situation requires fiscal restraint, though targeted supports are appropriate. 

This report by The Canadian Press was first published Oct. 20, 2022. 

The Canadian Press