Canada Economic Forecast

Canada Economic Forecast

September 28, 2021

GDP contracted in Q2, as a decline in fixed investment hampered growth in domestic demand, while a steep drop in exports weighed on the external sector. Turning to Q3, the economy should have rebounded robustly, but a preliminary GDP estimate for the month of July suggested output dipped 0.4%, dragged down by downbeat manufacturing and retail trade activity. Meanwhile, fears of another wave of Covid-19 cases will likely keep authorities from easing restrictions anytime soon. Nevertheless, the unemployment rate dipped to its lowest level since February 2020 in August, while the manufacturing PMI suggested activity expanded at a quicker pace in the same month relative to July, boding well for overall GDP. In politics, Trudeau’s Liberal Party failed to secure a majority government in the latest election held on 20 September, but will remain in power, leaving the economic landscape more or less the same.

Canada Economic Growth

GDP is seen expanding at a rapid pace this year as the impact of the pandemic fades. In 2022, growth should ease on a less favorable base effect, but falling unemployment, high accumulated savings, looser restrictions and monetary stimulus should propel household spending. However, uncertainty surrounding new variants of the virus clouds the outlook. FocusEconomics analysts project growth of 5.5% in 2021. In 2022, our analysts see growth easing to 4.1%, which is down 0.1 percentage points from last month.

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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