Canadian Outlook Economic Forecast: Summer 2004

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.

Document Highlights

• Restrained by a number of key domestic developments, growth will reach 3 per cent in 2004 and 3.2 per cent in 2005.
• The U.S. economy will churn out impressive growth of 4.4 per cent in 2004 and 3.6 per cent in 2005.
• Canada’s dollar will continue to slide, fetching $0.737 U.S. in 2004 and $0.72 U.S. in 2005.
• Monetary tightening will commence early in 2005, with shortterm interest rates heading up 185 basis points during the year.
• Housing starts are expected to tumble from 220,000 units this year to 186,000 in 2005.
• Government spending will lag well behind the rest of the economy in the near term.