Document Highlights
Russia’s invasion of Ukraine destabilizes a world that had been hoping for an improvement in the COVID-19 story. There is considerable risk on both fronts.
Sharply higher commodity prices and trade flow disruptions will benefit producers in Canada’s primary sector but add to inflation pressures and supply chain challenges for the rest.
Real GDP growth will stay on its pandemic-recovery track this year and next, but slower performances will follow as elevated consumer savings start to dry up.
Trade will be a net contributor to Canada’s GDP over the forecast period. Exports got off to a bumpy start this year but will be robust enough later to lead import growth. Business investment will be a plus as well.
The labour force has returned to pre-pandemic levels, with high participation rates and low unemployment. We expect labour vacancies to be a continuing problem for employers.
Expect four interest rate hikes from the Bank of Canada this year as it tries to tame more persistent inflationary pressures.
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