Canadian Outlook Summary: Spring 2020
This quarterly economic forecast provides highlights of the Canadian Outlook report, which presents the short-term national outlook.
- The Canadian economy is reeling as the impacts of the COVID-19 pandemic ravage consumer and business spending and cratering oil prices have put a halt to the expected rebound in the energy sector.
- The economy came to a near-halt at the end of last year. Growth has not been much better in the first quarter and is set to contract in the second. Overall, we expect real GDP to expand by just 0.3 per cent this year before bouncing back with 2.5 per cent growth next year.
- Exports and non-residential business investment are expected to fall this year.
- The Bank of Canada has responded to the deteriorating economic outlook in an unprecedented way. In a period of just over one week, the Bank slashed its overnight rate by 100 basis points.
- Lower interest rates will throw more fuel onto the fire that is Canada’s housing market, leading to a strong increase in resale home prices and residential investment this year.
- Encouragingly, given the historically tight labour markets and the short-term nature of the economic shocks, businesses are expected to retain workers as much as they can, and employment should recover along with the economy.