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Canadian economic forecast

Canadian Outlook Economic Forecast

This quarterly economic forecast presents the short-term national outlook. 

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Download the Summer 2020 summary

Published: June 22, 2020 (21 pages)

Highlights

  • The effects of the COVID-19 pandemic have been severe. Mandated business closures and a collapse in both business and consumer confidence will result in an 8.2 per cent contraction for the Canadian economy this year—the worst annual contraction on record.
  • At its peak, roughly 3 million Canadians had lost their jobs due to the pandemic. The worst does appear to have passed, however, as nearly 300,000 jobs were regained in May. Nevertheless, the road to recovery will be long and employment will still be nearly 1.1 million lower for 2020 as a whole than it was in 2019.
  • The devastation in labour markets is weighing heavily on spending this year. Household consumption dipped by 11.3 per cent in the first quarter, and we expect a staggering 57.5 per cent drop in the second. And while a recovery is inevitable in the second half of the year, spending is not forecast to return to its pre-pandemic level until the second half of 2021.
  • The business sector will fare no better. With global demand drying up, exports are forecast to contract by 14.3 per cent in 2020. Unsurprisingly in this uncertain environment, firms are reluctant to invest in new capacity, and we expect an 11.3 per cent drop in private sector investment this year.
  • With the worst of the recession likely over, the outlook for 2021 is brighter. The economy is forecast to rebound by 6.7 per cent in 2021 and 4.8 per cent in 2022. As the threat of the pandemic eases, how well the reopening of the economy and the withdrawal of government support is managed will be a crucial determinant of the economy’s trajectory over the next several years.

Canadian Outlook Economic Forecast

This quarterly economic forecast presents the short-term national outlook. 

Report cover

Download the Spring 2020 summary

Published: March, 2020 (18 pages)

Highlights

  • 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.

Canadian Outlook Economic Forecast

This quarterly economic forecast presents the short-term national outlook. 

Report cover

Download the Winter 2020 summary

Published: December, 2019 (18 pages)

Highlights

  • Real GDP is forecast to expand by 1.8 per cent in 2020 and 1.9 per cent in 2021. This is up slightly from 2019’s 1.7 per cent gain.
  • Canada’s trade sector will continue to be challenged by weak global growth.
  • Business investment has been dismal over the past few years. But prospects for energy investment are looking much more promising, thanks to improvements in energy takeaway capacity. And the outlook for the non-energy side remains moderate.
  • Canada’s economy will be supported by strong labour markets and modest growth in consumer spending.
  • While most provincial governments are expected to maintain a high degree of spending restraint as they work to balance their books, at the federal level the newly re-elected Liberal government is expected to increase spending and reduce taxes.
  • With global economic conditions stabilizing, we think the Bank of Canada will make no changes to interest rates in 2020.

Canadian Outlook Long-Term Economic Forecast

This annual economic forecast presents the long-term national outlook. The U.S. economic outlook is presented in a separate section.

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Download the 2020 Long-Term Outlook

Published: February 19, 2020 (124 pages)

Key findings

  • Economic growth is expected to improve from its recent sluggish pace but is unlikely to exceed 2 per cent over the long term.
  • The Canadian economy, after growing by 1.6 per cent in 2019, will expand by 1.8 per cent in 2020.
  • Weak consumer spending has been one of the main areas holding back economic growth over the last year. While consumer spending should accelerate in 2020, high levels of household debt will limit this improvement.
  • The trade sector is also underperforming. Slowing global growth and ongoing trade tensions will prevent a stronger performance in 2020.
  • Beyond 2020, economic growth will be constrained by declining labour force growth and weak business investment.
  • Annual business investment is $50 billion below 2014 levels. There will be a rebound in the coming years, but growth will be slow over the long term.
  • From 2020 to 2040, GDP growth is projected to average just 1.7 per cent.

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