Canadian Outlook Economic Forecast: Summer 2017

The Conference Board of Canada, 185 pages, August 8, 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

  • The Canadian economy got off to a great start in 2017, thanks to strong household consumption and a pickup in machinery and equipment investment.
  • GDP is expected to increase by a solid 2.6 per cent this year before falling back to growth of less than 2 per cent in 2018.
  • Households are the main driver of this year’s strong performance. However, elevated debt levels, slowing job growth, and easing house prices will take some of the steam out of consumer spending in the second half of this year.
  • Business investment is expected to decline for the third consecutive year but make a modest recovery in 2018.
  • Non-energy exports will see little growth in 2017. While stronger global growth should allow for a modest improvement next year, the outlook for trade is clouded by the risks of increased protectionism.

Table of Contents

RÉSUMÉ

EXECUTIVE SUMMARY

Chapter 1–Household Income and Employment

  • Subdued Income Gains for the Foreseeable Future
  • Quarterly Update—Jobs Rally Continues, but Wages Still Lagging
  • Employment
  • Income

Chapter 2–Household Consumption

  • Impressive First Quarter to Drive Consumption Growth this Year
  • Weak Energy and Food Prices Slow Inflation
  • Consumer Confidence Still High but Housing Market Remains a Concern
  • Households in Precarious Position as Rate Increase Looks Imminent
  • More Spending on Services as Population Ages

Chapter 3–Housing

  • Modest Slowing in National Housing Markets Seems the Best Call for Now
  • If Targeted Policies Do Not Cool Housing Markets, Perhaps Burgeoning Consumer Debt Will
  • Local Housing Markets: Toronto’s Tax Starts to Bite
  • Housing Starts Higher This Year, Lower in 2018
  • Residential Investment

Chapter 4–Government

  • Public Sector Boosting Growth but Budget Deficits Widen
  • Federal Fiscal Outlook
  • Provincial Fiscal Outlook
  • Public Spending Increases Timed Right

Chapter 5–Business Investment

  • Non-Energy Investment Gearing up for a Recovery
  • Investment Drivers
  • Investment in Machinery and Equipment
  • Building Construction
  • Investment in Engineering
  • Investment in Intellectual Property

Chapter 6–International Trade

  • Trade a Drag on Economic Growth in 2017
  • Trade Outlook
  • Merchandise Exports Remain Sluggish in 2017
  • Merchandise Imports Pick Up Steam
  • Non-Merchandise Trade Balance Holds Steady
  • Deficit on Current Account Balance Narrows

Chapter 7–Energy

  • Energy Sector on the Mend, but Recovery Remains Fragile
  • All Eyes on Inventories as Crude Markets Continue to Disappoint
  • Outlook for Canada’s Energy Sector

Chapter 8–Industry Trends

  • Brighter Skies for Most Industries in 2017
  • Mixed Outlook for Primary Industries
  • Construction Will Closely Track Residential Activity
  • Manufacturing Facing Some Challenges
  • Elevated Household Debt Will Start to Weigh on Some Commercial Services
  • Demographics Drive Non-Commercial Services Outlook
  • Public Administration Outlook Positive Over the Near Term

Chapter 9–Financial Markets

  • Bank of Canada Set to Move Soon as Capacity Pressures Loom
  • Robust Economic Growth Sets the Stage for Higher Interest Rates
  • U.S. Federal Reserve Eyes Balance Sheet Measures
  • Monetary Policy in Other Major Economies

Appendix A–Forecast Tables

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