Canada Economic Forecast

Canada Economic Forecast

May 31, 2022

After gaining momentum in Q4 2021, preliminary data suggests the economy outperformed its G7 peers in Q1, with StatCan estimating growth of 1.4% quarter-on-quarter. Looking at the monthly picture, economic activity growth was muted in January due to Omicron and poor weather affecting energy output. However, momentum picked up in February thanks to healthy expansions in manufacturing and customer-facing services. In particular, the accommodation and food services sector saw a double-digit gain as the Omicron wave faded and associated restrictions were eased. Turning to Q2, available signs are mainly positive. In April, the unemployment rate fell to an all-time low, while the manufacturing PMI was well in expansionary territory and housing starts jumped, boding well for residential investment. However, multi-decade high inflation could be weighing somewhat on spending intentions.

Canada Economic Growth

Growth will ease in 2022 as interest rates and inflation increase and momentum in the U.S. slows. Nevertheless, a tighter labor market and reduced Covid-19 restrictions will support private spending. Moreover, higher oil and gas prices will buoy government coffers. Uncertainty surrounding possible new Covid-19 variants and fears of recession in the U.S. are risks. FocusEconomics analysts project growth of 4.0% in 2022, which is up 0.1 percentage points from last month. In 2023, our analysts see growth easing to 2.5%.

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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