Canadian Outlook Economic Forecast: Winter 2020

The Conference Board of Canada, 112 pages, February 27, 2020
Report
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This quarterly economic forecast presents the short-term national outlook.

Document 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.

Table of Contents

Key findings

Principales conclusions

Section 1—Household income and employment

  • Labour constraints to slow job growth
  • Wage gains bring young and old into the workforce
  • Employers need to be flexible
  • More modest income gains coming

Section 2—Household consumption

  • Despite solid income gains, households are reluctant to spend

Section 3—Housing

  • Solid fundamentals boost Canadian housing markets
  • Forecast underpinnings
  • New construction
  • Existing housing
  • Residential investment
  • Local housing markets

Section 4—Government

  • Provinces keep government spending growth contained
  • Federal fiscal outlook
  • Provincial fiscal outlook
  • Government investment and consumption spending

Section 5—Business investment

  • Canada’s poor investment performance
  • Investment drivers
  • Investment by industry
  • Investment by category

Section 6—International trade

  • A challenging year ahead
  • Trade outlook
  • Lacklustre year for merchandise exports in 2020
  • Import activity accelerates but remains sluggish
  • Service deficit gradually worsening
  • Deep deficit on current account balance slowly shrinking

Section 7—Energy

  • Energy outlook turns around
  • Discount on Canadian heavy crude to remain stable
  • Canada in store for a wave of energy investment
  • Pipelines in the pipeline encouraging for producers

Section 8—Industry trends

  • Industrial output growth set to pick up over the near term
  • Outlook for primary resources improves
  • Construction leads the way
  • Tepid outlook for manufacturing
  • Commercial services will slow slightly
  • Demographics will have a big impact on non-commercial services
  • Public administration output growth set to slow

Section 9—Financial markets

  • After extensive interventions, central banks take a pause
  • Economy in good enough shape for Bank of Canada to remain on sidelines
  • Federal Reserve is done cutting rates for foreseeable future
  • Monetary policy in other countries

Appendix A—Forecast tables

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