OTTAWA, July 18, 2012 /CNW/ - The European debt crisis, subpar economic
growth in the United States and an overstretched Canadian consumer will
limit Canada's economy to growth of 2.2 per cent in 2012 and 2.4 per
cent in 2013, according to The Conference Board of Canada's Canadian Outlook-Summer 2012. In its Spring 2012 outlook, Conference Board forecasted growth in real
gross domestic product of 2.3 per cent in 2012 and 2.8 per cent next
"Even though trade links between Europe and North America are of
secondary importance to Canada and the United States, the ongoing
fiscal and financial difficulties hobbling many European countries will
continue to play havoc with the whole global economy," said Pedro Antunes, Director, National and Provincial Forecast. "Business leaders in
Canada and the United States - as well as households in both countries
- are keenly aware of the precariousness of the global economic
Europe's financial woes continue to affect confidence, stock and
commodity markets, and hiring in the United States and Canada. Even if
a deeper European crisis is averted, the U.S. economy is expected to muddle along with growth of just 2.3 per cent this year.
This weakness south of the border is holding back exports for some
industries, although strong resource sector development will help
generate solid gains in total merchandise exports.
Canada's domestic economy is also feeling the pinch. Federal and
provincial austerity plans will reduce the public sector's share of
overall gross domestic product (GDP) over the next four years.
Although household debt surged to roughly 150 per cent of disposable
income over the first half of 2012, rock-bottom interest rates will not
give consumers much incentive to ease their spending. Rate hikes looked
imminent in the spring, but heightened concern over Europe's woes and
softer growth prospects for Canada are forcing the Bank of Canada to
hold off for now. Instead, the federal government has introduced
tighter mortgage rules in a bid to quell over-exuberant consumers.
SOURCE CONFERENCE BOARD OF CANADA
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Link to publication: http://www.conferenceboard.ca/e-library/abstract.aspx?did=4963
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