Canada Economic Forecast

Canada Economic Forecast

October 27, 2020

The economy likely recovered markedly in Q3. Monthly GDP increased solidly in July, while projections pointed to another healthy expansion for August. Moreover, in September, the unemployment rate fell 1.2 percentage points from the month prior, with the labor market recouping roughly 76% of the jobs lost in March and April. Furthermore, retail sales grew modestly in August, while a flash estimate pointed to a flat reading for September, hinting at stronger private consumption in Q3. In addition, residential investment likely rebounded notably in Q3, as suggested by a surge in housing starts during the quarter. That said, daily crude oil production contracted slightly in July from June, pointing to a subdued energy sector. In politics, Prime Minister Trudeau survived a confidence vote on 21 October thus avoiding a snap election, amid a tightening of some Covid-19 restrictions in recent weeks.

Canada Economic Growth

Next year, GDP is set to rebound robustly as strong fiscal and monetary stimulus support domestic demand. Household spending should benefit from a lower unemployment rate and recovering consumer confidence. That said, recently renewed domestic lockdown and travel restrictions, as well as future developments in commodity prices, pose significant risks to the outlook. FocusEconomics analysts project growth of 4.9% in 2021, which is down 0.1 percentage points from last month’s forecast, and growth of 3.1% in 2022.

Canada Economy Data

2015 2016 2017 2018 2019
Population (million)35.736.136.537.037.5
GDP per capita (USD)43,62142,40945,20246,38146,361
GDP (USD bn)1,5561,5291,6491,7161,736
Economic Growth (GDP, annual variation in %)0.71.03.22.01.7
Domestic Demand (annual variation in %)0.30.53.32.11.3
Consumption (annual variation in %)2.31.93.72.21.6
Investment (annual variation in %)-4.3-4.04.01.8-0.4
Exports (G&S, annual variation in %)3.41.41.43.11.3
Imports (G&S, annual variation in %)0.80.14.22.60.6
Industrial Production (annual variation in %)-0.50.14.53.1-0.9
Retail Sales (annual variation in %)2.65.27.12.91.6
Unemployment Rate6.97.06.35.85.7
Fiscal Balance (% of GDP)-0.1-0.5-0.1-0.4-0.4
Public Debt (% of GDP)91.291.790.589.7-  
Money (annual variation in %)6.08.55.85.27.8
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)-3.5-3.1-2.8-2.5-2.0
Current Account Balance (CAD bn)-69.6-62.6-60.2-55.5-47.0
Trade Balance (CAD billion)-24.6-25.0-24.1-22.1-18.4

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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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