Stuart Bergman headshot, EDC
Stuart Bergman Vice-President and Chief Economist Export Development Canada Stuart Bergman

December is traditionally a time for forecasters to take stock of the year that was; celebrate the good calls, more commonly account for the bad ones and sharpen our focus on what it all means for the years ahead.

At EDC Economics, we’re proud to have not been lured by team recession, but acknowledge having overweighted our downside scenario, perhaps scarred by recent history and the unending parade of “unprecedented” events. But to the very end, the global economy defied prognostications of its imminent demise, thanks to a resilient U.S. consumer, the post-reopening normalization of activity in China, and an unusually warm winter in Europe.

Now, the long-awaited easing of global supply chains, which gained momentum over the course of this year, has helped prices for fertilizers, crude oil, natural gas, and food settle back down to 2021 levels, before Russia’s invasion of Ukraine. In addition to that, labour markets across several key economies began loosening through the summer, and unemployment rates have inched up, inlucding in Canada, the United States, the United Kingdom, France, and China, dampening wage growth.

Although we continue to keep a keen eye on the impacts of labour action and increased levels of geopolitical uncertainty, easing cost pressures have allowed for rapid disinflation worldwide, with more than half of the Organisation for Economic Co-operation and Development (OECD) now at-or-below 4% annual inflation. Inflation rates in Canada and the U.S. have fallen dramatically from their 2022 peaks, and are now approaching target.

While the pace of price increases has been moderated by the impact of last year’s already high base, easing inflation has been hard earned. The dramatic runup in central bank policy rates imposed a substantial cost on businesses and consumers alike. Debt is now more expensive to carry, and higher debt servicing costs are squeezing corporate margins and running down excess consumer savings. Canadian households are of particular concern, with debt-to-income ratios among the highest in the OECD and well-above their American counterparts, who are also benefiting from a preponderance of longer-term fixed rate mortgages.

The cost of debt is also a concern for many governments, which must now look to repair balance sheets in the wake of COVID-19-related assistance programs. With revenues depressed and additional spending on new priorities, like infrastructure, the energy transition and security, deficits remain elevated. As such we don’t expect fiscal policy in developed economies to provide much additional support, while many developing market governments must focus on debt sustainability, in the context of higher global interest rates.


Some economies face challenges beyond the cyclical rebound from a pandemic-induced slowdown. European industry must confront the prospect of a future without access to cheap Russian energy. As China wrestles with its evolving growth model, great power politics has impacted its ability to attract foreign investment, raising questions around the country’s aspirations of self-sufficiency. Meanwhile, the U.S. economy must contemplate the need to secure access to the labour and resources required to continue to power its economic leadership.

Embedded in these is the global movement toward the de-risking of a still very globalized economy. The need to shorten supply chains, if not geographically then ideologically, has been underscored by the increased probability of geopolitical disruptions and the rapid spread of human pathogens, and the vulnerability of our trade infrastructure to the impacts of climate change and human error. This resiliency imperative will impact global trade and financial flows not just over the next year, but possibly for decades to come. 

The bottom line?

Canadian exporters should expect customer demand to remain weak in 2024, as pandemic savings run dry, unemployment rates rise, and onerous debt burdens weigh on activity. Interest rates will begin easing midway through the year, once inflation is back within target range, giving some lift to the global economy toward the end of the year. In the meantime, companies will have to navigate increased geopolitical risk and shifting trade patterns.

The outlook will play out differently depending on the sector and region of interest. EDC’s Sectors in focus report highlights in-depth information on sectors and markets of opportunity. Our latest Country Risk Quarterly can help exporters navigate the volatile country risk landscape. You can also watch out for our upcoming Global Economic Outlook, publishing in January.

This week, special thanks to William Thomas, a researcher at EDC Economics.

On behalf of all of us at EDC Economics, wishing you the best for the holiday season and a very happy and healthy 2024.

As always, at EDC Economics, we value your feedback. If you have ideas for topics that you’d like us to explore, please email us at economics@edc.ca and we’ll do our best to cover them.