Canada Economic Forecast

Canada Economic Forecast

September 1, 2020

The economy declined at the sharpest pace on record in the second quarter due to a collapse in private spending and investment activity. Strict lockdown measures dented domestic demand and flagging oil production hindered exports, although a freefall in imports led to the external sector contributing positively to GDP. Turning to Q3, the economy is gradually strengthening. In July, economic activity continued to rebound according to preliminary data, while the unemployment rate fell following a surge in new hires, with more than half of the jobs lost since the onset of the pandemic now regained. Moreover, the labor market should have continued to strengthen noticeably in August following Toronto’s move into “Stage 3” of its reopening in July, boding well for household spending. Meanwhile, the housing market was upbeat in July as housing starts increased strongly, which should support residential investment in Q3.

Canada Economic Growth

The economy will contract steeply this year, as oil production declines and the elevated unemployment rate weighs on private consumption. That said, robust monetary and fiscal stimulus should limit the downturn. An uncertain outlook for the U.S. economy and future developments in commodity prices pose significant downside risks. FocusEconomics analysts project a contraction of 6.7% in 2020, which is up 0.2 percentage points from last month’s forecast, before growth of 5.0% in 2021.

Canada Economy Data

2015 2016 2017 2018 2019
Population (million)35.736.136.537.037.5
GDP per capita (USD)43,62142,40945,20246,38146,361
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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