The Globe and Mail reports in its Saturday, Oct. 1, edition that Credit Suisse slashed its world growth estimates for 2022 and 2023 last week while also projecting a bleak outlook for the Canadian economy. The Globe's Scott Barlow writes that economist Ray Farris used the disquieting title "The worst is yet to come" for Credit Suisse's quarterly outlook. Mr. Farris cited persistent inflation pressure as the core reason for his pessimism and predicted "a deteriorating economic environment for risk assets" for the next six to nine months. Credit Suisse dropped its 2022 global GDP forecast to 2.6 per cent from 2.9 per cent. An even deeper cut to 2023 expectations sees the growth estimate fall to 2.1 per cent from 2.6 per cent. Credit Suisse's economist covering Canada, Wenzhe Zhao, wrote that "the risk of a real interest rate shock to the Canadian economy is rising." He expects the Bank of Canada to push its overnight rate to 4.5 per cent, up from the current 3.25 per cent, to combat inflation pressure. This level will eventually depress spending for consumers still carrying near-record levels of debt. Credit Suisse believes that the higher borrowing costs will push the housing market into an even sharper contraction.
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