Canada Economic Forecast

Canada Economic Forecast

March 3, 2020

The economy slowed in the final quarter of last year, restrained by a plethora of temporary setbacks. On the domestic front, fixed investment contracted at the sharpest pace in one year after surging in Q3, while the external sector further dragged on growth as exports contracted at the steepest pace since Q3 2017. On a brighter note, private consumption growth was stable in Q4, likely supported by upbeat wage growth and a tight labor market. Shifting to the first quarter of the year, economic activity will likely rebound due to a low base effect in Q4, but should remain soft as protests over the construction of the Coastal GasLink pipeline in B.C. led to the temporary shutdown of CN Rail’s operations across large parts of the country. Nevertheless, housing market data has been upbeat, while the unemployment rate ticked down in January and the manufacturing PMI rose in the same month—all of which bode well for domestic demand.

Canada Economic Growth

The economy is seen expanding at a steady pace this year, with resilient private consumption and a stabilization in the energy sector supporting economic activity. Volatility in commodity prices, slower-than-expected growth in the U.S. and elevated household debt pose downside risks to the outlook, however. FocusEconomics analysts project growth of 1.6% in 2020, which is unchanged from last month’s forecast, and 1.8% in 2021.

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Canada Facts

Value Change Date
Bond Yield1.701.00 %Dec 31
Exchange Rate1.300.15 %Jan 01

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