By Freschia Gonzales
May 5, 2025
Excerpt from article:
Canada may be facing prolonged stagflation risks compounded by US trade policy and domestic capital flight, according to private equity manager Stephen Johnston of Omnigence Asset Management, in an interview with BNN Bloomberg.
Johnston said stagflation has existed in Canada for “quite a long time,” describing the current environment as one of below-trend growth — around zero percent real GDP or slightly negative — coupled with above-trend inflation.
He emphasized that this differs from the stagflation conditions of the 1970s.
He pointed to structural economic issues driving inflation, such as high levels of indebtedness and consumption outpacing production.
He identified US tariffs under US President Donald Trump’s administration as a worsening factor, calling them a deliberate strategy to pull capital into the US.
Johnston said this could result in capital and industrial capacity being pulled out of Canada, with serious consequences for growth.
He added that the United States is effectively Canada’s only export market and is responsible for “like 25 percent of Canadian GDP.”
Original article here