October 2024 Financial Market Update for Family-Owned Enterprises in Canada

As we enter the final quarter of 2024, the financial markets are navigating a landscape filled with both opportunities and risks. The global economy shows resilience, yet certain regions, including Canada, face mounting challenges. For businesses and investors in Alberta and across Canada, staying ahead of these developments is crucial. This update provides insights into the economic trends shaping the current and future market environment, with a focus on what it means for family-owned enterprises.

Executive Summary

• Global Growth Resilience: Despite uncertainties, global growth is projected to remain stable through 2024 and 2025, while Canada’s outlook remains fragile.
• Canadian Market Outlook: The Bank of Canada’s rate cuts are aimed at reviving growth, but rising household debt and credit stress signal ongoing challenges.
• Alberta’s Strength: Alberta continues to outperform other regions like Ontario and British Columbia, particularly in the housing market.
• Key Sectors: Volatility in energy prices persists, with stabilization expected in 2025, creating both challenges and opportunities for Alberta’s economy.

Global Market Overview

Global markets are demonstrating resilience despite ongoing geopolitical tensions. According to the OECD Economic Outlook, global growth is projected to stabilize at 3.2% through 2024 and 2025, with inflation expected to gradually ease. For Canada, however, the situation is more complex. The Canadian dollar is expected to weaken in 2025, adding to import costs, while the U.S. economy—Canada’s largest trading partner—continues to show strong growth with a 3.1% expansion rate in Q3 2024. This offers some positive spillover effects for Canadian exporters, especially in Alberta​(OECD Economic Outlook)​(Andersen_Canada_Report_…).

Canadian Economic Outlook

Canada’s economic recovery remains fragile. While the Bank of Canada has initiated multiple rate cuts to stimulate growth, high household debt levels and rising credit stress are emerging as significant risks. The 5-year fixed mortgage rate has climbed to 4.76%, up from 2.5% in 2020, leaving many Canadian households struggling to manage their debt. Credit card delinquencies and auto loan defaults are also on the rise, pointing to broader economic stress​(Andersen_Canada_Report_…). With the public sector driving much of the job creation, family-owned businesses that rely on private sector activity may need to adapt their strategies to stay competitive​(OECD Economic Outlook).

Alberta: A Bright Spot in Canadian Markets

Alberta remains a bright spot in Canada’s otherwise sluggish economic landscape. The province’s housing market is faring much better than those in Ontario and British Columbia, where affordability concerns have dampened demand. Alberta’s diverse economic base—anchored by energy, agriculture, and growing sectors like renewables—continues to offer robust growth opportunities​(Andersen_Canada_Report_…)​(OECD Economic Outlook). Energy prices, although volatile, are expected to stabilize by 2025, which bodes well for Alberta’s oil-dependent economy.

Key Strategies for Family-Owned Enterprises

1. Debt Management: Rising debt stress calls for a strategic approach to credit management. As interest rates are expected to decline further into 2025, consider refinancing options to lower borrowing costs.
2. Leverage Alberta’s Strength: With Alberta showing stronger economic fundamentals than much of the country, family-owned businesses should look to capitalize on opportunities in energy, agriculture, and other key sectors.
3. Tax-Efficient Wealth Structuring: Now is an opportune time to revisit wealth structuring strategies. Leveraging tools such as Individual Pension Plans (IPPs) and corporate-owned life insurance can provide both protection and tax efficiency.

Navigating the Road Ahead

In the face of economic challenges, family-owned enterprises must stay proactive. By understanding the latest financial trends and working with a team that specializes in wealth management, businesses can navigate the complexities ahead and secure their financial futures. At Shajani CPA, we are here to help you stay ahead of market developments and guide your business to long-term success.

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This information is for discussion purposes only and should not be considered professional advice. There is no guarantee or warrant of information on this site and it should be noted that rules and laws change regularly. You should consult a professional before considering implementing or taking any action based on information on this site. Call our team for a consultation before taking any action. ©2024 Shajani CPA.

Shajani CPA is a CPA Calgary, Edmonton and Red Deer firm and provides Accountant, Bookkeeping, Tax Advice and Tax Planning service.

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