Canada

RGE's Q1 2010 Canada Outlook

RGE expects that Canadian growth will accelerate in 2010 to about 2.7% after a contraction of 2.5% in 2009. This forecast, notably higher than RGE expected in the fall, reflects the assumption of stronger growth for the U.S. economy, and domestic labor market strength and improved household wealth in Canada. Domestic demand, supported by improvements in the labor markets and an ample expansion of credit, will drive growth in 2010. The weakness in Canada’s manufacturing sector, strength of the loonie (CAD) and trade and investment linkages to the U.S. will constrain Canada’s growth. With global trade staging only a modest recovery, Canada’s exports will follow suit, while strong domestic demand will boost imports, keeping Canada’s external balances in deficit.

Compared to past recessions, the 2008-09 slump was sharp (-3.3% net output loss) but relatively short in duration. Economic momentum began to pick up toward the end of 2009 as indicated by the most recent monthly output data. Canada’s economy likely grew at about 3% q/q annualized in Q4...

Read the Q1 2010 Canada Outlook.