Wholesale Banking - Positioned for Growth
TD
TD Economics Update¹
Global Outlook: Global economy slows in 2023
Inflation in advanced economies continues to moderate, primarily driven by falling energy prices.
In Europe, weak growth and cooling inflation have firmed expectations the European Central Bank (ECB) has reached
the peak of its policy tightening campaign.
China's economy is getting an unexpected boost from new government stimulus measures, but weak domestic demand,
falling exports, and a slumping property sector limit the upside to growth.
U.S. Outlook: Economy has remained resilient, but growth expected to slow by year end
■ The economy has proven resilient through the first three quarters of 2023 amid the Federal Reserve's efforts to slow
demand and quell inflation. Primarily driving growth is consumer spending, which has been supported by real income
gains, excess savings, and a relatively strong labor market. At 3.9%, the unemployment rate remains low, but has now
edged up 0.5% percentage points from its 53-year low reached back in April.
■ After a brief uptick this summer, consumer price inflation fell from 3.7% (y/y) in September to 3.2% in October. However,
the core PCE price index remains at an elevated level of 3.7%. Both headline and core inflation are expected to slow
through the remainder of the year, gradually easing to the Fed's 2% target by mid-2025.
Canada Outlook: Canadian economy slows as unemployment rises, inflation cooling slowly
The Canadian economy is slowing under the weight of Bank of Canada's (BoC) interest rate hikes, as second quarter
real GDP contracted by -0.2% (q/q, annualized). Third quarter real GDP growth is currently tracking at 0.2%, which would
undershoot the BoC's most recent estimate of 0.8%. Since April, the unemployment rate has increased from 5.0% to
5.7%, as labour force growth has outpaced job creation. However, wage gains continue to sit at elevated levels.
Canadian consumer price inflation fell to 3.8% (y/y) in September, from 4.0% in August. Under the hood, the BoC's trim
and median core inflation measures remain sticky, running at a 3.5%-4.0% (3-month, annualized) pace since last
summer, which remains well above the BoC's 2% target. Further progress on inflation is expected to continue through the
remainder of the year, which will keep the BoC on the sidelines until they start to cut rates in 2024.
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