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 year.
"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 health."
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.
For further information:
Link to publication: http://www.conferenceboard.ca/e-library/abstract.aspx?did=4963
FOR MORE INFORMATION:
Brent Dowdall, Media Relations, Tel.: 613- 526-3090 ext. 448
E-mail: [email protected]