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.
- The Canadian economy is projected to grow by 2 per cent in 2018 and 2019. However, growth is expected to slow to below 2 per cent beginning in 2020.
- The economy has been driven by robust household spending in recent years. This has been spurred in part by high home prices and a large increase in consumer debt.
- Over the next few years, employment growth will be constrained by slow labour force growth and low unemployment. This will combine with high household debt and rising interest rates to temper real consumer spending.
- Non-residential business investment has not yet recovered from its decline following the commodities price crash of 2014. The current weakness is largely the result of low investment in mining.
- Business investment is expected to post solid growth as the new US–Mexico–Canada trade deal lowers uncertainty and businesses respond to high levels of capacity utilization.
- The economy has operated below full capacity over the last several years. However, it is projected to reach full capacity in 2020. After that, economic growth will be limited to an average of 1.7 or 1.8 per cent.