Canada Economic Forecast

Canada Economic Forecast

July 24, 2018

Canada’s economy appears to have held up reasonably well through the first half of the year, despite the slowdown in consumer spending in the first quarter. Although growth in April was modest as cold weather hit retail trade, it beat expectations on solid manufacturing gains. Higher interest rates and new mortgage-lending rules continued to pinch consumers in the second quarter, although recent employment gains likely provided some upside for household spending. Meanwhile, housing metrics have begun to stabilize after falling off for much of the past year, leaving policymakers to breathe a cautious sigh of relief. Nevertheless, external headwinds are picking up; Canada-U.S. trade relations are at an all-time low, and the possibility of additional tariffs on automotive exports would bruise the external sector. Furthermore, recent posturing suggests that wrapping up NAFTA renegotiations before year-end is currently all but off the table. Despite this, exports and investment both seem largely unshaken so far.

Canada Economic Growth

Firm economic fundamentals are expected to support a solid outturn this year. Although household spending is seen moderating as higher interest rates squeeze indebted consumers, tight labor market dynamics should cushion wages. Oil and gas exports, as well as stronger non-residential investment, are expected to lend support. Risks to the outlook persist, however: NAFTA remains in limbo, and the housing market is still fragile. Met the why particular analysts expect growth of 2.1% in 2018, unchanged from last month’s forecast, and 1.9% in 2019.

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Canada Facts

ValueChangeDate
Bond Yield2.311.00 %Aug 14
Exchange Rate1.310.15 %Aug 15
Stock Market16,1490.23 %Aug 15

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