OTTAWA, Feb. 21, 2014 /CNW/ - Despite a more optimistic outlook for
exports, Canada's economy is expected to grow just 2.3 per cent this
year, according to The Conference Board of Canada's Canadian Outlook: Winter 2014.
"Export and business investment growth were subpar in 2013. But with
growing demand from the U.S. and a weaker Canadian dollar, export
volumes and investment will see stronger growth and, as a result,
overall economic activity will pick up," said Pedro Antunes, Deputy Chief Economist. "However, modest spending by Canadians and
fiscal constraints by governments in order to return to fiscal balance
will keep the economy from fully capitalizing on the rebound in
Real gross domestic product growth of only 2.3 per cent is forecast for
Canada in 2014. Slightly stronger growth of 2.4 per cent is expected
Despite sluggish economic growth, the federal government is on track to
run a budget surplus in 2015-16.
Stronger exports to the United States will be somewhat offset by weak
growth in government spending.
As the federal and most provincial governments reduce their deficits,
the public sector is expected to contribute little to economic growth.
Real government spending on public services and infrastructure will
increase by only 0.5 per cent this year before accelerating by one per
cent in 2015.
For consumers, low interest rates and soft price inflation are helping
to sustain spending despite modest labour income growth in 2014.
However, spending on big ticket items, such as cars and home
furnishings, will moderate next year as financing costs start to edge
up. Real household spending is forecast to grow by about 2.3 per cent
per year this year and next.
Although Canada's export volumes posted only modest gains in the second
half of 2013, the growing strength of the U.S. economy should boost
trade over the next two years. Following growth of 1.3 per cent last
year, total exports are forecast pick up in 2014 with growth of 3.4 per
cent, followed by 4.2 per cent growth in 2015.
Despite its recent depreciation, the Canadian dollar remains a
relatively strong currency thanks to solid commodity prices and
Canada's relatively good economic performance. We expect the dollar to
remain at or above the 90 cent range throughout the forecast.
Along with exports, business investment is expected to pick up this year
and in 2015, bolstered by spending in machinery and equipment.
Following growth of just 1.1 per cent in 2013, business investment is
projected to increase by 3.1 per cent this year.
The Conference Board will host a 60-minute webinar on the Canadian Outlook today at 2:00 PM ET.
SOURCE: Conference Board of Canada
For further information:
Yvonne Squires, Media Relations, Tel.: 613- 526-3090 ext. 221