Canadian Outlook Economic Forecast: Autumn 2016

The Conference Board of Canada, 180 pages, November 16, 2016
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This quarterly economic forecast provides highlights of the Canadian Outlook report, which presents the short-term national outlook.

Document Highlights

  • A weak second quarter has led us to lower our forecast for economic growth this year to 1.3 per cent. Next year, growth is expected to pick up to 2 per cent.
  • Demand for our exports is being held back by weak global growth. In 2017, a pickup in the U.S. economy and slightly stronger growth in the rest of the world should boost our exports.
  • Despite weak job gains and wage growth, households will be the main driver of economic growth this year. However, moving forward, consumer spending will slow, held back by the record-high level of consumer debt.
  • The large decline in business investment over the last several years remains a major concern. While much of the weakness is due to the collapse in energy investment, non-energy investment has also performed poorly.
  • Without a substantial improvement in business investment, the economy is unlikely to see growth above 2 per cent throughout the medium term.

Table of Contents

Executive Summary—Wildfires and Weakening Global Economy Hold Back Growth

Résumé—Croissance freinée par les incendies et le ralentissement de l’économie mondiale

Household Income and Employment—Weak Labour Markets and Slow Wage Growth to Weigh on Household Incomes

  • Weak Labour Markets and Slow Wage Growth to Weigh on Household Incomes
  • Employment
  • Wages and Other Sources of Income

Household Consumption—Consumption Growth to Remain Slow

  • Weak Inflation Giving Consumers a Temporary Boost This Year
  • High Debt Levels Put Households in Precarious Position
  • Confidence Steadies, but Consumers Remain Apprehensive
  • Composition of Consumption Spending Will Change

Housing—Vancouver Cools, Toronto Remains Hot

  • Prospects Mixed for Canada’s Housing Market
  • Affordability Good for Now, but Medium-Term Risks Lurk
  • Local Housing Markets—Vancouver’s Foreign-Buyers Tax Dominates Headlines
  • Housing Starts to Cool in 2017
  • Residential Investment to Slow in 2017

Government—Government Fiscal Situation Remains Bleak

  • Federal Fiscal Outlook
  • Provincial Fiscal Outlook
  • Public Sector Spending Ramps Up

Business Investment—Energy Sector Won’t Power Business Investment Recovery

  • Investment Drivers
  • Machinery and Equipment Investment
  • Investment in Engineering
  • Building Construction
  • Intellectual Property Investment

International Trade—Brighter Days Ahead

  • Trade Outlook
  • Merchandise Exports to Pick Up
  • Stronger Import Activity Ahead
  • Non-Merchandise Trade Deficit Shrinks
  • Current Account Balance Improves but Remains in Deficit

Energy—Medium-Term Outlook for Oil & Gas Remains Challenging

  • Crude Oil Markets Expected to Balance Next Year
  • Natural Gas Prices Will Remain Weak Over the Medium Term
  • Outlook for Canadian Oil and Gas Investment

Industry Trends—Commercial Services the Growth Leader

  • Mixed Outlook for Primary Industries
  • Modest Outlook for Canadian Manufacturers
  • Most Commercial Service Industries Will Fare Well
  • Demographics Drive Non-Commercial Services

Financial Markets—Elusive Export Rebound Keeps Interest Rates Low

  • Canadian Interest Rates: Lower for a Lot Longer
  • U.S. Set to Withdraw Stimulus at a Slow Pace
  • Monetary Policy in Other Major Economies

Appendix A—Forecast Tables

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