Canadian Outlook Economic Forecast: Summer 2005

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Canadian Outlook Economic Forecast: Summer 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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    This quarterly executive summary provides highlights of the Canadian Outlook that presents the short-term national outlook.

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