Canada Economic Forecast

Canada Economic Forecast

September 27, 2017

GDP growth blew past expectations in Q2 on impressive household spending and a surge in exports, handing Canada the top spot among G7 countries in terms of overall growth in H1. Moreover, household spending grew alongside the household savings rate in Q2, further signaling that heavily leveraged consumers were benefiting from higher wages and steady employment growth rather than leaning on debt. Business investment, plagued in recent years by subdued capital spending in the energy sector, also edged up for a second quarter. On the external side, increased production in the energy sector helped deliver the strongest expansion of exports in three years in Q2, and at long last promised the economy’s complete adjustment to lower oil prices. As expected, however, recent indicators for H2 suggest the economy has been slowing. In August, the Ivey PMI fell for a second consecutive month; the rapid rise in national housing prices also eased once again.

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Canada Facts

ValueChangeDate
Bond Yield2.08-0.95 %Oct 12
Exchange Rate1.25-0.05 %Oct 13
Stock Market15,8070.41 %Oct 13

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Canada Economic Growth

September 27, 2017

Growth is expected to cool through H2 and into next year as household spending eases, but falling unemployment should soften the blow. Brisk global demand is expected to boost energy exports and prop up the external sector, although a strengthening loonie and NAFTA renegotiations could mitigate some of those gains. Moreover, an overheated property market in the face of higher interest rates presents a downside risk to the outlook. Our analysts expect GDP to grow 2.8% in 2017 and 2.1% in 2018, up 0.1 percentage point from last month’s forecast.

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