This quarterly economic forecast provides highlights of the Canadian Outlook report, which presents the short-term national outlook.
Canadian Outlook Economic Forecast: Winter 2008
Canadian Outlook Economic Forecast: Winter 2008
Canadian Economic Analysis
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- Despite a slowdown in job growth in December 2007, the U.S. economy is expected to avoid a recession. Still, growth in U.S. household spending will be very weak over the first half of 2008.
- While Canadian exporters continue to cope with weak demand south of the border and a high-flying loonie, there is plenty of momentum in Canada’s domestic economy. Real final domestic demand is forecast to expand by 3.4 per cent this year.
- The federal government’s economic statement in late November provides a surprise—nearly $15 billion in new fiscal stimulus to shore up household spending and investment in 2008.
- A strong dollar, pressure on retailers from cross-border shoppers, and another cut to the federal goods and services tax will significantly douse consumer price inflation—to just 1.3 per cent this year.
- A strong domestic economy coupled with a lack of inflation will keep monetary policy neutral in 2008. The bank rate is expected to remain unchanged until early 2009 when the U.S. economy recovers and monetary policy tightens in the United States and Canada.
- Record-high oil prices will boost overall energy investment even with weaker natural gas drilling and Alberta’s new royalty regime.
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