Canadian Outlook Long-Term Economic Forecast: 2019

The Conference Board of Canada, 219 pages, December 7, 2018
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This annual economic forecast presents the long-term national outlook. The U.S. economic outlook is presented in a separate section.

Document Highlights

  • 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.

Table of Contents

Executive Summary

Chapter 1—U.S. Outlook

  • Overview
  • Assumptions
  • Aggregate Demand

Chapter 2—Demographics

  • Population Aging Will Continue to Drive Demographic Change
  • Baby Boomers in the Driver’s Seat of Demographic Change
  • Population Aging: Not Just Canada
  • Components of Population Growth

Chapter 3—Monetary Policy

  • Economy Strong Enough to Absorb Rising Interest Rates
  • The Goal of Monetary Policy
  • Adoption of the Inflation-Control Target
  • Monetary Policy in the Era of Price Stability
  • Real Interest Rates
  • Nominal Interest Rates
  • The Canadian Dollar

Chapter 4—Fiscal Policy

  • Eliminating Government Deficits a Difficult Task
  • Historical Perspective
  • Federal Forecast
  • Provincial Outlook
  • Municipal Governments
  • Canada’s Social Safety Net
  • Health Care Spending Pressures Mount
  • Education
  • Social Assistance
  • Public Pension and Old Age Security Programs
  • Employment Insurance

Chapter 5—Energy

  • Long-Term Outlook for Energy Sector Clouded by Uncertainty
  • Long-Term Global Energy Outlook
  • Oil Markets
  • Natural Gas Markets
  • Investment
  • Production
  • Trade

Chapter 6—Labour Markets

  • Population Aging Drives Labour Market Trends
  • Generations in Canada
  • Baby Boomers Delay Retirement
  • Echo Boomers and Millennials Stand to Benefit
  • More Working Women, not More Kids, Is the Answer to Canada’s Labour Force Issues
  • Immigration Helps Too
  • Labour Force Growth and Participation
  • Key Labour Market Outcomes
  • Productivity
  • Natural Rate of Unemployment
  • The Changing Shape of Work in Canada

Chapter 7—Potential Output

  • Overview
  • Modest Growth for Potential Output
  • Gap Closure and Its Implications

Chapter 8—Aggregate Demand

  • Consumption
  • Housing
  • Business Investment
  • Government Spending
  • International Trade

Appendix A—Forecast Tables

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