This quarterly economic forecast examines the short-term economic outlook for Canada – all major components including consumer expenditures, housing, government, non-energy business investment, and trade. The outlook for the financial, labour, and energy markets is also given along with costs and prices. The U.S. economic outlook is presented in a separate section.
Document Highlights
- The real trade balance fell sharply over the second half of 2004 and will limit economic growth to 2.3 per cent in 2005.
- The Bank of Canada has taken a “wait-and-see” approach and is unlikely to lift interest rates until late in 2005.
- U.S. real GDP growth will ease to 3.2 per cent in 2005 as climbing interest rates take the steam out of consumer spending and new home construction.
- A growing interest rate spread with the United States will favour the greenback and take some pressure off of the Canadian dollar, which is expected to average US$0.80 in 2005.
- The latest federal budget provides little economic stimulus in 2005 and 2006, as most new measures are back-end loaded.
- Another massive build in business inventories was registered in 4Q 2004, with wholesalers and manufacturers responsible for most of the gain.
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