Canadian economic forecast
Canadian Outlook Economic Forecast
This quarterly economic forecast presents the short-term national outlook.
- 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.
- 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.