Canada Economic Forecast

Canada Economic Forecast

October 23, 2018

Canada and the United States struck a last-minute deal late on 30 September to uphold their longstanding free-trade relationship, bringing Canada into the fold on a pact reached a month earlier between the U.S. and Mexico. On the announcement, the North American Free Trade Agreement (NAFTA) was rechristened the United States-Mexico-Canada Agreement (USMCA), and continental investors breathed a heavy sigh of relief as the deal’s text confirmed the quarter-century-old dynamic survived largely intact. Although concessions were made by all sides—Canada will open its dairy market and, in exchange, will keep most dispute-resolution mechanisms, while trauma to the automotive sector was minimal—the new agreement was most notable for clearing the heavy clouds of uncertainty that previously hung over the external sector. Taken together with the nascent stabilization of the housing market, the economy appears to have dodged two bullets in recent months and, on the heels of a solid second-quarter outturn and in light of upbeat third-quarter metrics, looks set to ride out the remainder of the year at a comfortable, albeit slower, pace.

Canada Economic Growth

The economy should continue operating near potential next year, although growth is expected to moderate as higher borrowing costs eat into household-spending gains. Moreover, buoyant economic sentiment should propel the further recovery of non-residential investment. A rock-solid external sector, bolstered by the USMCA, as well as stronger oil and gas exports, should increasingly support activity over the medium-term. Met the why particular analysts see growth at 2.0% in 2019, unchanged from last month’s forecast, and 1.6% in 2020.

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Canada Facts

ValueChangeDate
Bond Yield2.421.00 %Nov 14
Exchange Rate1.320.15 %Nov 15
Stock Market15,1450.23 %Nov 15

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