Canadian Outlook

Updated: January 12, 2021 | Français

Recovery rests on vaccine rollout.

The news that safe and effective vaccines against COVID-19 have begun to be distributed has provided optimism that the pandemic could soon be beaten, lifting battered economies all around the world out of the deepest recession in modern times. This aligns with the assumption in our prior forecast, along with the expectation that still rising COVID-19 cases would lead to additional health-related restrictions and flatten the economic recovery over the first half of 2021.

Contents of the Winter 2021 edition:

Global and U.S. outlooks
Business sector
Housing sector
Housing markets shrug off pandemic
Fall fiscal update makes big promises
Steady rates will help guide the recovery

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Key findings

Canada’s economy rebounded through the summer, but rising COVID-19 cases—both at home and south of the border—will slow the pace of recovery. Many businesses in Canada face dim prospects over the first half of 2021.

A successful rollout of vaccines will encourage households to spend some of what they’ve amassed in savings. Household balance sheets are in great shape thanks to government support and travel bans that have cut spending on foreign travel to almost nothing.

The federal and provincial governments are pledging continued support to businesses and households. The pandemic will drive up public debt to record levels, putting a strain on government finances and public spending once the crisis is past.

Real GDP is forecast to post growth of 5.3 per cent in 2021 and 3.5 per cent in 2022. This follows the deepest recession in modern times. We estimate that economic activity dropped by 5.3 per cent in 2020.