The Minister of Finance predicts a period of economic stagnation in Quebec

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The Minister of Finance predicts a period of economic stagnation in Quebec

< p class="styled__StyledLegend-sc-v64krj-0 cfqhYM">Quebec Finance Minister Eric Girard

If he doesn't know if Quebec's economy fall into recession, Quebec Finance Minister Eric Girard says a period of stagnation is inevitable.

They say there's a 50% chance of a recession, but what's really important is that there's a 100% chance the economy will slow down , he said on Tuesday during a presentation at an event organized by the Autorité des marchés financiers (AMF) in Montreal.

We are in a period where growth will be around 0.0%, he says. When you're so close to 0%, you could be a little above or a little below, so you could have two consecutive quarters of negative growth [the technical definition of a recession].

Rising interest rates affect the economy. This slowdown notably affects the residential real estate sector and companies with variable rate debt. It has begun, he notes.

“When you take interest rates that are almost 0% and bring them to 4%, [it creates a] shock to the economy. It is certain that the sectors which are sensitive to interest rates will slow down. »

— Eric Girard, Minister of Finance

Mr. Girard says, however, that if there was a recession, it would be small and manageable. The Minister will provide an update on Québec's economic and financial situation in an update scheduled for December 8.

The great financier of the Legault government has also opened the door to a form of financial support for businesses. We will be there to help companies, if there were situations where the rise in interest rates caused liquidity problems for some of them.

However, he wanted to be reassuring about inflation, which reached a rate of 6.4% in Quebec in October compared to 6.5% in September, according to data from Statistics Canada. This compares to inflation of 6.9% for the whole country.

Despite relatively high annual inflation in October, Mr. Girard believes that the indicators point in the direction of a moderation in the progression of prices. He notes that the price of raw materials and goods is falling, although inflation remains high in the food sector.

The average [of the x27;inflation over a period of] one month, three months, six months is lower than the average [of] one year. All the indicators we look at show that inflation is slowing.

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