Canadian Outlook Economic Forecast: Summer 2005

Name: Canadian Outlook Economic Forecast: Summer 2005
SKU: 1309-0405-WEB
Availability: InStock

Canadian Economics

July 6, 2005

Canadian Economic Analysis

Author: Pedro Antunes

$465.00

Consumer spending forged ahead in the first quarter of 2005, posting annualized growth of 6.3 per cent.

Despite strong domestic demand, real GDP growth will be limited to 2.5 per cent in 2005 by a steep erosion in the real trade balance.

Signs of inflation remain subdued, but the Bank of Canada is still expected to start tightening monetary policy. Interest rates should start heading up in October.

The Fed is much further along on removing stimulus; short-term rates have come up 200 basis points and are forecast to dampen U.S. real GDP growth to 3.5 per cent in 2005.

Softened earlier this year by political uncertainty and a strong U.S. economy, the loonie has rallied recently, in line with our forecast of US$0.80 for 2005.

The Liberal–NDP alliance provides another significant boost to government spending; on a public accounts basis, federal program spending is nearing double-digit growth.

Business inventories continued to build for the third consecutive quarter, but strong wholesale and retail activity has kept the economy-wide inventory-to-sales ratio stable.

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