This quarterly economic forecast provides highlights of the Canadian Outlook report, which presents the short-term national outlook.
Document Highlights
Canada’s economy has started to grow again after sputtering in the spring. Output growth is forecast at 5.1 per cent for 2021 and 4.4 per cent for 2022. High levels of consumer savings and government stimulus are still powering through the system but will soon begin to ease. Toward the end of next year, economic growth is expected to cool considerably.
As labour markets come back to pre-pandemic strength, slow growth in the size of the working-age population will hamper economic potential after 2023, even with full employment.
Fundamentals for Canada’s oil and gas sector look brighter than in recent years. A return to stable demand and new pipeline capacity will allow Canadian producers to get higher prices for their products.
In Canada and elsewhere, widespread production delays and cost increases have led to higher inflation. Impacts are temporary, but it will take another year before consumer price increases fall back to the Bank of Canada’s 2.0 per cent target.
We don’t expect the Bank of Canada to increase short-term interest rates until the final quarter of next year.
Easing government stimulus measures will help reduce federal and provincial deficits, but the debt overhang a remains a long-term issue. Shorter term, our forecast reflects the September 20 election outcome, with no significant change to the direction of policy already signalled by the Liberal government. Minority governments, however, tend to add uncertainty to future program and spending plans.
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