This quarterly economic forecast examines the short-term economic outlook for Canada – all major components including consumer expenditures, housing, government, non-energy business investment, and trade. The outlook for the financial, labour, and energy markets is also given along with costs and prices. The U.S. economic outlook is presented in a separate section.
Canadian Outlook Economic Forecast: Spring 2009
Canadian Outlook Economic Forecast: Spring 2009
Canadian Economic Analysis
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- A sharp and sustained decline in U.S. household spending is behind the first contraction in global trade in over 60 years. The situation has brought even the strongest economies to their knees.
- Monetary and fiscal stimulus will not rescue the U.S. this year, but some indicators do suggest a bottom is forming. We expect the U.S. economy to experience soft but positive growth starting in the second half of 2009.
- Canada, too, is in the midst of recession. A decline in commodity prices and exports, coupled with soft domestic demand,will lead to a 1.7 per cent drop in real GDP in 2009.
- A huge decline in corporate profits has frozen Canadian business investment and hiring intentions. In turn, weak employment prospects have led households to curtail spending.
- This year, government spending will be the only remaining pillar of Canada’s once buoyant domestic economy, but this comes with hefty price tag—deep and enduring deficits.
- Central banks around the world will be looking to remove monetary stimulus at the first signs of recovery. Rock-bottom interest rates, a much weakened loonie, and a modest lift to energy prices will put upward pressure on Canada’s inflation next year.
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