Canadian Outlook Long-Term Economic Forecast: 2003

This annual economic forecast presents the long-term national outlook.

Document Highlights

Economic growth is forecast to average 2.6 per cent on an annual average basis between 2001 and 2020, in line with underlying potential output growth.

Interest rates will rise swiftly from the current cyclical trough and then remain static at a steady-state level throughout the long-term period.

CPI inflation will remain close to the midpoint of the Bank of Canada’s target range over the long term, nudging up to an annual gain of 2.2 per cent by 2020.

The Canadian dollar will appreciate substantially in the 2005-13 time period as global capital inflows into the U.S. debate.

Real export growth will weaken over the long-term because of slowing U.S. growth and an appreciation in the dollar.

Governments will continue to be fiscally prudent over the long term, holding growth in spending to a slower pace than GDP growth, a move that will ensure the generation of reasonable surpluses through 2020.

Except for a small pause between 2014 and 2017, new home construction will face continued decline as demographic factors weaken household formation.