Canadian Outlook

Updated: July 22, 2021  |  Français

Booming Economy Not Without Its Risks

The rollout of vaccines got off to a slow start in Canada but has picked up steam in the spring. Currently, about two-thirds of Canadians are either fully or partially vaccinated. Consequently, Canada is well on its way to attaining herd immunity. The increase in vaccinations has enabled provinces to loosen restrictions and life is slowly returning to some semblance of normalcy. However, there are still hurdles to overcome. These include vaccine resistance among some segments of the population and the persistence of COVID-19 variants that continue to pop up.

Vaccines are gradually enabling the removal of public health restrictions across the country. But, on their own, they are not sufficient to sharply boost growth from the devastation to the economy that occurred in the spring of last year. Fortunately, many Canadians have built up their savings over the past 14 to15 months due to their inability to spend on services like travel and meals out.

Contents of the Summer 2021 edition:

  • Global and U.S. outlooks
  • Business sector
  • Housing sector
  • Housing market prospects
  • Budget 2021 brings more support
  • Interest rates on hold... for now

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Key findings

The Canadian economy has already recovered nearly 80 per cent of the jobs lost during the severe recession last year. But jobs for lower income Canadians remain well below pre-pandemic levels. This unwelcome development could persist through the medium term as some positions—for instance, in bars and restaurants—could be permanently lost

Large federal fiscal deficits will persist through the medium term although they will slowly decline. New spending initiatives – including the federal government’s plan to implement a national child care program – will maintain upward pressure on expenditures.

A sharp rebound in household spending over the near term is due to households starting to spend some of the huge savings built up over the course of 2020 and the first part of 2021. The composition of spending will change as households will spend less on goods and more on services like travel.

Canada’s economy will expand by 6.7 per cent this year and 4.4 per cent in 2022. This represents an upgrade from our spring update and partly reflects the generally successful rollout of vaccines that has led to a gradual reopening of the economy and a boost in confidence.

Issue briefings

Canada’s two-year outlooks

Business investment

Recovery to Pick Up Steam Later This Year

13-min read  |  July 21, 2021

Energy

Forthcoming

Financial markets

Forthcoming

Government

Budget 2021 Brings More Support

13-min read | July 22, 2021

Household consumption

Forthcoming

Household income and employment

Forthcoming

Housing

Forthcoming

International trade

Forthcoming

Industry trends

Forthcoming


Previous release

Hope at Last: Canada's Two-Year Outlook

Impact paper  |  24-min read
March 30, 2021

Previous two-year Canadian outlooks

Business investment

Businesses Ready to Invest Again

14-min read  |  April 15, 2021

Energy

A Better Year Ahead for Oil and Gas

13-min read  |  April 28, 2021

Financial markets

Bank of Canada Won’t React to Temporary Spike in Inflation

13-min read  |  April 12, 2021

Government

Deficits as Far as the Eye Can See

13-min read  |  April 28, 2021

Household consumption

Consumers Ready to Spend Again as Long as Restrictions Are Lifted

13-min read  |  April 28, 2021

Household income and employment

Pandemic Restrictions Drive Uneven Job Recovery

13-min read  |  April 28, 2021

Housing

Residential Markets Hot … Maybe Too Hot

13-min read  |  April 13, 2021

International trade

Recovery Gains Momentum

13-min read  |  April 28, 2021

Industry trends

Industries Shift Into Recovery Mode in 2021

13-min read  |  April 19, 2021