Hope at Last: Canada’s Two-Year Outlook

The Conference Board of Canada, 20 pages, March 30, 2021
Impact paper
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This quarterly economic forecast provides highlights of the Canadian Outlook report, which presents the short-term national outlook.

Document Highlights

  • Canada’s economy will expand by 5.8 per cent this year and 4.0 per cent in 2022, thanks to the rollout of vaccines, which has led to a gradual reopening of the economy and boosted confidence.
  • A sharp rebound in household spending over the near term is due, in part, to households starting to spend some of the massive savings they built up over the course of 2020. The savings rate surged from 1.4 per cent prior to the pandemic to 14.8 per cent in 2020.
  • The Canadian economy has already recovered close to 80 per cent of the jobs lost during the severe recession last year and the unemployment rate stood at 8.2 per cent in February, down from double digits in the spring and summer of 2020.
  • The Bank of Canada will keep interest rate hikes on hold until the early part of 2023, as inflation, while spiking higher in the spring of this year, will remain in the Bank’s 2.0 per cent target range through the medium term.
  • After depreciating to US$0.72 in the second quarter of last year, the loonie has recovered sharply thanks to a rebound in world oil prices and a slump in the greenback. We expect the loonie to trade in the US$0.79–US$0.80 range over the near term.
  • The federal fiscal deficit will improve from the $219 billion recorded in 2020 but will remain uncomfortably high.

Table of Contents

  • Key findings
  • Overview
  • Global and U.S. outlooks
  • Business sector
  • Household sector
  • Housing markets on the boil, but correction worries persist
  • Deficits as far as the eye can see
  • Bank of Canada won’t react to temporary spike in inflation

Appendix A—Methodology

 

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