Canada Economic Forecast

Canada Economic Forecast

June 26, 2018

Canada’s economy began the year at a solid pace but moderated somewhat from the fourth quarter of last year as growth in household spending continued to slow. A closer look, however, provided several upsides to the first-quarter reading; non-residential investment ticked up and exports did not fall off as initially thought. That said, it confirmed weakness in the housing market as residential investment plummeted on the implementation of new mortgage-lending rules at the beginning of the year. Meanwhile, available data for the second quarter suggests the market continued grappling with the new guidelines and higher borrowing costs into May, although there were nascent signs that it could soon stabilize. The outlook worsened substantially for trade, however, in recent weeks; the U.S. announced new steel and aluminum tariffs on Canadian imports, which Canada quickly reciprocated. Despite their trivial dollar value, imposing tariffs could signal U.S. intentions in the ongoing renegotiation of NAFTA and open the door to additional tariffs on Canadian automotive and agricultural wares.

Canada Economic Growth

Solid economic fundamentals should support a healthy pace of growth this year. Although household spending will continue to moderate as higher interest rates squeeze indebted consumers, tight labor market dynamics should lift wages. Heavier government spending and stronger oil and gas exports are expected to lend support. Meanwhile, risks to the outlook persist: NAFTA remains in limbo, and the housing market appears fragile. Met the why particular analysts expect growth of 2.1% in 2018, down 0.1 percentage points from last month’s forecast, and 1.9% in 2019.

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Canada Facts

ValueChangeDate
Bond Yield2.161.00 %Jul 12
Exchange Rate1.320.15 %Jul 13
Stock Market16,5610.23 %Jul 13

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