Canada Economic Forecast

Canada Economic Forecast

June 2, 2020

The economy tumbled in the first quarter, as non-essential businesses were forced to close in March. Private consumption contracted at a series-record rate in Q1, while investment and exports also declined severely. Turning to the second quarter, economic activity is likely faring even worse: A flash estimate pointed to a 11% contraction in April. Boding ill for household spending, employment levels in April fell by nearly two million from March, pushing the unemployment rate to the highest level since 1982, with roughly 14% of workers having lost their jobs since February. Exacerbating matters, depressed crude oil prices forced Alberta producers to curtail output by roughly 25% in late May, which will be hampering the energy sector and exports in Q2. On a brighter note, in late April the government decided to gradually ease containment measures, while the Canada Emergency Response Benefit should be cushioning the blow to households’ income.

Canada Economic Growth

The economy is expected to contract sharply this year, amid low oil prices and output, and as a spike in unemployment weighs on private consumption. Nevertheless, robust monetary and fiscal stimulus should limit the downturn. A worsening outlook for the U.S. economy and a possible second lockdown pose significant downside risks. FocusEconomics analysts project a contraction of 6.9% in 2020, which is down 1.1 percentage points from last month’s forecast, before growth of 4.9% in 2021.

Canada Economy Data

2015 2016 2017 2018 2019
Population (million)35.736.136.537.037.5
GDP per capita (USD)43,62142,40945,20246,381-  
GDP (USD bn)1,5561,5291,6491,716-  
Economic Growth (GDP, annual variation in %)0.71.03.22.0-  
Domestic Demand (annual variation in %)0.30.53.32.1-  
Consumption (annual variation in %)2.31.93.72.2-  
Investment (annual variation in %)-4.3-4.04.01.8-  
Exports (G&S, annual variation in %)3.41.41.43.1-  
Imports (G&S, annual variation in %)0.80.14.22.6-  
Industrial Production (annual variation in %)-0.50.14.53.1-  
Retail Sales (annual variation in %)2.65.27.12.91.6
Unemployment Rate6.97.06.35.85.7
Fiscal Balance (% of GDP)-0.1-0.5-0.1-0.4-  
Public Debt (% of GDP)91.391.890.189.9-  
Money (annual variation in %)6.08.65.85.27.8
Inflation Rate (CPI, annual variation in %, eop)1.61.51.92.02.2
Inflation Rate (CPI, annual variation in %)1.11.41.62.31.9
Inflation (PPI, annual variation in %)-0.8-0.23.13.9-0.1
Policy Interest Rate (%)0.500.501.001.751.75
Stock Market (annual variation in %)-11.117.56.0-11.619.1
Exchange Rate (vs USD)1.381.341.261.361.30
Exchange Rate (vs USD, aop)1.281.321.301.301.33
Current Account (% of GDP)-3.5-3.1-2.8-2.5-  
Current Account Balance (CAD bn)-69.6-62.6-60.2-55.5-  
Trade Balance (CAD billion)-24.6-25.0-24.1-22.1-18.3

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Canada Facts

Value Change Date
Bond Yield1.701.00 %Dec 31
Exchange Rate1.300.15 %Jan 01

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