Canadian Outlook Economic Forecast: Winter 2017

The Conference Board of Canada, 174 pages, January 27, 2017
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This quarterly economic forecast provides highlights of the Canadian Outlook report, which presents the short-term national outlook.

Document Highlights

  • Despite strong third-quarter growth, we estimate the economy grew by just 1.3 per cent in 2016.
  • Economic growth was held back by weak business investment and a disappointing export performance.
  • In 2017, economic growth is expected to accelerate to 1.9 per cent, as the energy sector is less of a drag on the economy, exports manage a slightly better performance, and government stimulus ramps up.
  • But this will be partly offset by slowing consumer spending and declining residential construction.
  • The central bank will keep its key rate at current levels until April 2018. A widening interest rate differential between Canada and the U.S. will put downward pressure on the loonie over the near term.

Table of Contents

Executive Summary

Resumé

Chapter 1—Household Income and Employment

  • Incomes to Struggle Amid Weak Labour Markets and Sluggish Wage Growth
  • Employment by Industry
  • Wages and Other Sources of Income

Chapter 2—Household Consumption

  • Lacklustre Consumer Spending for the Foreseeable Future
  • Inflation Is Projected to Increase in 2017
  • Elevated Household Debt Levels Continue to Be a Concern
  • National Consumer Confidence Index Holds Steady, but Troubling Trends Emerge
  • Spending Patterns to Change Over Time

Chapter 3—Housing

  • Canada’s Housing Market Set to Cool
  • The Housing Party Is Clearly Winding Down
  • Local Housing Markets: The GTA and Its Neighbours Stand Alone
  • Housing Starts
  • Residential Investment to Ease in 2017

Chapter 4—Government

  • Balanced Budgets Remain out of Reach
  • Federal Fiscal Outlook
  • Provincial Fiscal Outlook
  • Public Sector Providing Needed Boost to Growth

Chapter 5—Business Investment

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

Chapter 6—International Trade

  • Hope for the Best, Prepare for the Worst
  • Trade Outlook
  • More Speed Bumps Ahead for Merchandise Exports
  • Import Growth Will Remain Sluggish in 2017
  • Non-Merchandise Trade Deficit Gradually Widens
  • Current Account Deficit to Climb to Record High

Chapter 7—Energy

  • Cautious Optimism on the Road to Higher Prices
  • Various Factors Will Keep Oil Prices in Check
  • Outlook for Canada’s Energy Sector

Chapter 8—Industry Trends

  • Growth Prospects Improve for Most Industries in 2017
  • Primary Industries Slowly Getting Back on Track
  • Modest Construction Activity
  • Manufacturing Industries Continue to Face Challenges
  • Commercial Services Hold Steady
  • Demographics Driving Non-Commercial Services
  • Public Administration

Chapter 9—Financial Markets

  • Loonie to Head Lower as U.S. Interest Rates Rise
  • Weak Demand Keeps Bank of Canada on the Sidelines
  • “Dot Plot” Drama
  • Monetary Policy in Other Major Economies

Appendix A—Forecast Tables

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