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Manulife Financial Corp MNQFF reported a drop in third-quarter profit on Wednesday, as escalating worries of an economic downturn impaired earnings at its wealth and asset management unit.

Manulife’s core earnings in global wealth and asset management sank nearly 2 per cent to $345-million in the third quarter, while net inflows dropped 69 per cent to $3-billion as turbulent markets deterred investors.

A soaring inflation has ravaged the Canadian economy which despite slowing to 6.9 per cent from a peak of 8.1 per cent remains way above the 2 per cent target.

Last month, the Bank of Canada increased its policy rate by half a percentage point to 3.75 per cent, but warned that economic activity would stall from the fourth quarter of 2022 through the first half of 2023.

Manulife, Canada’s largest insurer, reported core earnings of $1.32-billion, or 67 cents a share, in the three months ended Sept. 30, compared with $1.52-billion, or 76 cents a share, a year earlier.

Net income attributed to shareholders was $1.35-billion, or 68 cents per share, compared with $1.59-billion, or 80 cents a share, a year earlier.