Canada Economic Forecast

Canada Economic Forecast

April 30, 2019

Growth likely picked up in Q1 in SAAR terms following a much weaker-than-predicted Q4 last year, helped by a supportive base effect and inventory accumulation. In January, the economy outperformed expectations, driven by broad-based expansions in almost all industries, particularly construction and manufacturing. However, the expansion in Q1 was likely still modest overall. The unemployment rate ticked up in the quarter, while retail sales were muted in the first two months of the year, suggesting subdued household spending. Moreover, the manufacturing PMI maintained a downward trajectory throughout the quarter, suggesting the sector posted only a meager expansion. In political news, on 15 April the government discretely reduced retaliatory tariffs on some U.S. imports in a bid to proactively avoid losing domestic jobs. However, the move could in turn reduce pressure on the Trump administration to lift tariffs on Canadian steel and aluminum.

Canada Economic Growth

Economic growth will likely moderate in 2019 amid a backdrop of slower global growth, a contraction in fixed investment, and oil output cuts in Alberta. Elevated household debt, global trade tensions and uncertainty over the ratification of the USMCA pose downside risks to the outlook. Met the why particular analysts expect growth of 1.6% in 2019, which is down 0.1 percentage points from last month’s forecast, and 1.7% in 2020.

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Canada Facts

ValueChangeDate
Bond Yield1.731.00 %May 11
Exchange Rate1.350.15 %May 13
Stock Market16,1930.23 %May 13

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