Canadian Outlook Summary Spring 2020

Canada’s economic growth ground to a halt in the fourth quarter of 2019. With the economy already on precarious footing, the added shocks of the recent rail blockade protests, the arrival of COVID-19, and a collapse in oil prices have brought the country to the brink of recession.

Contents of the Spring 2020 summary:

  • The impact of recent shocks on economic growth
  • Consumer spending will slow this year
  • Housing markets set for a big year
  • Central banks respond with aggressive monetary easing

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Woman on cellphone; Canadian flag infront of glass skyscraper

Key findings

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.

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.

Exports and non-residential business investment are expected to fall this year.

The economy came to a near-halt at the end of 2019, and is set to contract in the second quarter. 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.

The Bank of Canada has responded to the deteriorating economic outlook in an unprecedented way, slashing its overnight rate by 100 basis points.

Encouragingly, businesses are expected to retain workers as much as they can, and employment should recover along with the economy.