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Canada Economic Forecast

Canada Economic Outlook

A flash estimate put GDP growth in Q2 at a little over 1% in quarter-on-quarter annualized terms, which would mark a slowdown from Q1’s 3.1% expansion. Data within the quarter was choppy, with GDP rising in April and May in monthly terms before falling in June according to provisional data. May’s growth was underpinned by the end of a strike by government workers and improved global supply chains, though fires and facility maintenance in Alberta province weighed on energy output. Turning to Q3, activity in the first half of July was likely held back by a port strike which reportedly disrupted USD 380 million per day in trade. In addition, unemployment rose and employment fell in July. In contrast, solid housing starts in the month bode well for residential investment, while a recent cash handout to low earners should be propping up spending.

Canada Inflation

Inflation rose to 3.3% in July, above June’s 2.8%. The reading was primarily due to a less favorable base effect for energy prices, and was notably above market expectations of 3.0%. Inflation is forecast to fall within the Central Bank’s 1.0–3.0% target range by Q4 on improved global supply chains, the effect of past rate hikes and a more favorable base effect.

This chart displays Economic Growth (GDP, annual variation in %) for Canada from 2013 to 2022.

Canada Economic Data

2018 2019 2020 2021 2022
Population (million) 37.0 37.5 38.0 38.2 38.8
GDP (USD bn) 1,725 1,743 1,648 2,002 2,137
GDP per capita (USD) 46,612 46,441 43,385 52,390 55,021
GDP (CAD bn) 2,236 2,314 2,210 2,510 2,783
Economic Growth (Nominal GDP, ann. var. %) 4.4 3.5 -4.5 13.6 10.9
Economic Growth (GDP, ann. var. %) 2.8 1.9 -5.1 5.0 3.4
Domestic Demand (ann. var. %) 2.7 1.3 -3.8 5.8 2.7
Private Consumption (ann. var. %) 2.6 1.5 -6.3 5.1 4.8
Government Consumption (ann. var. %) 3.2 1.0 1.3 6.4 2.0
Non-Residential Fixed Investment (ann. var. %) 3.5 3.2 -11.6 4.3 8.0
Fixed Investment (ann. var. %) 2.5 0.8 -2.4 7.4 -1.5
Exports (G&S, ann. var. %) 3.8 2.7 -8.9 1.4 2.8
Imports (G&S, ann. var. %) 3.3 0.4 -9.3 7.8 7.5
Industrial Production (ann. var. %) 3.5 0.1 -8.2 4.5 3.8
Retail Sales (ann. var. %) 3.8 1.9 -0.9 11.9 8.3
Home Prices Index (ann. var. %) 3.7 1.2 6.5 15.0 11.4
Disposable Income (ann. var. %) 3.0 4.5 8.4 4.1 5.3
Wages (ann. var. %) 2.6 2.7 6.7 3.0 3.1
Unemployment (% of active population, eop) 5.7 5.6 8.9 6.0 5.0
Unemployment (% of active population, aop) 5.9 5.7 9.7 7.5 5.3
Fiscal Balance (% of GDP) 0.4 0.0 -10.9 -4.4 -0.8
Public Debt (% of GDP) 95.1 96.4 129.2 120.9 100.8
Inflation (CPI, ann. var. %, eop) 2.0 2.2 0.7 4.8 6.3
Inflation (CPI, ann. var. %, aop) 2.3 1.9 0.7 3.4 6.8
Inflation (Core, ann. var. %, aop) 1.5 1.8 1.2 2.8 5.6
Inflation (PPI, ann. var. %, aop) 3.9 -0.1 -0.4 13.9 12.8
Target for the Overnight Rate (%, eop) 1.75 1.75 0.25 0.25 4.25
3-Month T-Bill (%, eop) 1.64 1.66 0.06 0.16 4.23
10-Year Bond Yield (%, eop) 1.98 1.71 0.71 1.49 3.30
Exchange Rate (CAD per USD, eop) 1.37 1.30 1.27 1.26 1.35
Exchange Rate (CAD per USD, aop) 1.30 1.33 1.34 1.25 1.30
Current Account Balance (USD bn) -41.0 -34.0 -35.5 -5.4 -7.0
Current Account Balance (% of GDP) -2.4 -2.0 -2.2 -0.3 -0.3
Merchandise Trade Balance (USD bn) -16.8 -14.2 -30.0 3.7 16.8
Merchandise Exports (USD bn) 452 449 390 507 599
Merchandise Imports (USD bn) 469 463 420 504 582
Merchandise Exports (ann. var. %) 6.6 -0.8 -13.2 30.3 17.9
Foreign Direct Investment (USD bn) 37.7 50.5 26.9 65.7 52.6

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