Canada Economic Forecast

Canada Economic Forecast

December 23, 2021

GDP rebounded at a brisk pace in Q3, but a sharp downward revision revealed a notable contraction in Q2. Household spending surged in Q3, but was partially offset by declining fixed investment and government consumption. Meanwhile, exports of goods and services grew robustly while imports dipped, meaning the external sector contributed positively to overall GDP. Shifting to Q4, momentum has likely been fairly stable. A flash estimate suggested that GDP growth accelerated in October, while the unemployment rate dipped to the lowest level since February 2020 in November, and the manufacturing PMI pointed to strong expansions in the first two months of the quarter. Nevertheless, supply chain woes, some weather-related disruptions in the West and the recent rise in new Covid-19 cases leading to the tightening of restrictions in some parts of the country have likely capped growth.

Canada Economic Growth

The economy is projected to grow at a more moderate pace in 2022, due to a less favorable base effect. Nevertheless, a lower unemployment rate, elevated household savings and further progress on the vaccination front should support private spending. Uncertainty surrounding new variants of the virus, potential stop-start restrictions and volatile oil prices cloud the outlook. FocusEconomics analysts project growth of 4.1% in 2022, which is unchanged from last month. In 2023, our analysts see growth easing to 2.9%.

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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