Canada Economic Forecast

Canada Economic Forecast

September 25, 2018

Canada’s economy posted a solid performance in the second quarter, buoyed by a resilient external sector which posted strong gains despite the ongoing trade spat with the United States. Meanwhile, momentum looks to have broadly held up in the third quarter. Despite higher borrowing costs, household spending appears to have remained elevated on firm employment gains and moderate wage growth. Furthermore, housing-market metrics continue to suggest that fundamentals have stabilized. However, trade uncertainties persist. Although bilateral NAFTA talks resumed between Canada and the U.S. on 19 September, an immediate deal is unlikely and negotiations may well extend until the U.S.-imposed 1 October deadline as negotiators remain at odds over a number of clauses, including dairy-industry tariffs and the dispute-settlement process.

Canada Economic Growth

Although the economy is expected to continue operating near potential next year, analysts see growth edging down as higher borrowing costs eat further into household-spending gains. That said, wage growth should remain elevated as the labor market approaches full employment. Despite short-term uncertainty, a solid external sector supported by oil and gas exports should increasingly buoy activity over the coming years. FocusEconomics analysts expect growth of 2.2% in 2018 and 2.0% in 2019, which is up 0.1 percentage points from last month’s forecast.

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Canada Facts

ValueChangeDate
Bond Yield2.491.00 %Oct 11
Exchange Rate1.300.15 %Oct 12
Stock Market15,4140.23 %Oct 12

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