Canadian Outlook

Updated: April 28, 2021 | Français

Hope at last.

The surge in new COVID-19 cases last autumn continued in the early part of this year and led to a return of strict lockdowns in many parts of the country. This depressed economic activity, and we anticipate that real GDP growth will increase by only 0.7 per cent in the first quarter of this year. Although the worst of the second wave has subsided, new infections remain high, while more severe variants of the virus continue to increase.

Fortunately, the rollout of vaccines, which got off to a sluggish start, has ramped up recently, and most Canadians should be fully vaccinated by this autumn. This will lead to a reopening of the economy and, consequently, real GDP should accelerate at a rapid pace in the second half of this year.

Contents of the Spring 2021 edition:

Global and U.S. outlooks
Business sector
Housing sector
Deficits as far as the eye can see

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Key findings

Canada’s economy will expand by 5.8 per cent this year and 4.0 per cent in 2022, thanks to the rollout of vaccines, which has led to a gradual reopening of the economy and boosted confidence.

The federal fiscal deficit will improve from the $219 billion recorded in 2020 but will remain uncomfortably high.

The Bank of Canada will keep interest rate hikes on hold until the early part of 2023, as inflation, while spiking higher in the spring of this year, will remain in the Bank’s 2.0 per cent target range through the medium term.

The Canadian economy has already recovered close to 80 per cent of the jobs lost during the severe recession last year and the unemployment rate stood at 8.2 per cent in February, down from double-digits in the spring and summer of 2020.