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.