Canada Economic Forecast

Canada Economic Forecast

December 20, 2019

Growth softened in the third quarter on the back of a contraction in exports. Domestic demand, however, accelerated due to a surge in fixed investment and stronger private consumption growth amid solid wage gains. Turning to the fourth quarter, growth appears broadly steady. On the one hand, the unemployment rate ticked up to an over one-year high in November while housing starts ebbed compared to Q3, hinting at softer residential investment. More positively, the manufacturing PMI hit a nine-month high in November amid faster output growth. Meanwhile, in politics, the USMCA deal recently moved closer to coming into force after being approved by the U.S. House, boding well for investment and the external sector going forward.

Canada Economic Growth

Growth should be stable in 2020, supported by resilient private consumption and a stabilization in the energy sector. Moreover, a recovery in housing prices bodes well for investment. Volatility in commodity prices and elevated household debt pose downside risks to the outlook, however. FocusEconomics analysts expect growth of 1.6% in 2020, which is unchanged from last month’s forecast, and 1.8% in 2021.

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Canada Facts

ValueChangeDate
Bond Yield1.701.00 %Dec 31
Exchange Rate1.300.15 %Jan 01

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