Canadian CFOs think there is a 42% chance Canada could slip into a recession

There were fewer people working in Alberta, Manitoba as well as Newfoundland and Labrador in January, Statistics Canada said Friday.
Chief financial officers at Canadian corporations see a 42 per cent chance , Canada will fall back into recession by the end of 2016. The Canadian Press

Chief financial officers at Canadian corporations have a pessimistic outlook on the country’s economy and see a 42 per cent chance, on average, Canada will fall back into recession by the end of 2016, according to a new survey of CFOs.

The CFO Global Business Outlook from Duke University asked more than 1,600 execs from countries around the world about the probability of their country slipping into recession this year. The optimism of 36 Canadian CFOs fell slightly this quarter with just to 56 per cent of respondents feeling optimistic about Canada’s economy – that’s down from 59 per cent in December.

READ MORE: Canadian confidence in economy at its lowest in over 20 years

The CFOs think there’s 42 per cent chance of recession by the end of 2016. The survey also found employment will remain flat and business spending will increase one per cent this year.

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American CFOs are slightly more optimistic with just 31 per cent thinking the American economy will be in recession by the end of the year.

“The recession outlook has worsened significantly in the last nine months,” said John Graham, a finance professor at Duke’s Fuqua School of Business and director of the survey, in a statement. “Last June, the odds of recession were low in many countries, including the U.S., Canada and much of Europe. Today, driven in large part by slowing emerging economies and volatile financial markets and commodity prices, the risk is relatively high around the world.”

READ MORE: Canada’s unemployment rate creeps up to 7.3% in February

The executives say the slowdown in China (59 per cent), political turmoil in the U.S. (53 percent), a stock market decline (50 percent) and the price of oil (40 per cent) are the biggest risks to the economy.

The CFO survey mirrors similar polling last week which found Canadian confidence in the economy is at its lowest point in over 20 years. Ipsos polling has been tracking Canadians faith in the economy for more than two decades, and the latest poll found just 36 per cent would rate the Canadian economy as good.

The new unemployment Statistics Canada released Friday found the national jobless rate crept up to 7.3 per cent last month for the first time in three years.

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StatsCan said Canada lost 2,300 net jobs in February with Alberta, hit hard by slumping oil prices, leading the way. Alberta’s unemployment s rate rose to at 7.9 per cent in February, its highest level since it reached 8.2 per cent in August 1995.

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