What’s to Happen to the Canadian Economy in 2014?
We’ve already talked about real estate predictions for 2014, as well as predictions for the mortgage market to go along with it. But, seeing as how we are just a few days into the new year, we thought we’d bring you some more predictions for what’s to happen in Canada this coming year, and they look at the overall economy. So if you want to know what will happen with inflation, the employment rate, and other goings-on in the economy, you’ve come to the right place.
Last year was another in which domestic activity, including consumer spending, government spending, and housing all greatly outperformed exports and investments. This year though, the American economy will start roaring along at full throttle, and that’s going to greatly help our export sector. The Royal Bank of Canada claims that as America’s economy only gets stronger, this largest destination for Canadian exports will once again start demanding made-in-Canada building materials, machinery, automobiles, and industrial equipment. And those exports will need to come largely from British Columbia, Quebec, and Ontario.
Our gross domestic product seems to be the one economic area that no one can agree on. The Deutsche Bank says that it will grow at a pace of 2.9 per cent, while Merrill Lynch says that it will only grow by a rate of 1.8 per cent. Capital Economics says Canada’s annual GDP will only grow by 1.5 per cent. If anything will hamper our GDP this year, says economists Peter Dungan and Steve Murphy at University of Toronto, it will be a decrease in government spending along with a lag in residential construction.
News of inflation was virtually non-existent this year, and it’s not expected to get much better with economists expecting it to sit at just 1.5 per cent. Chief economist at Desjardins, Francois Dupuis, says “it is difficult to envision key rate hikes in the U.S. or Canada before September 2015,” which will keep inflation stagnant.
While the employment rate won’t see a huge jump this year, the jobless rate is expcted to decrease slightly to 6.8 per cent from the 7.1 per cent it sat at last year. Researchers at U of T however, don’t expect it to be as low as the 6.2 per cent it was at before the recession until 2017. And while in the past we’ve been very strong in the labour and manufacturing industries, cuts in those areas will be made up by services in the professional field, such as engineering and accounting positions.
While 2013 started out strong for the Canadian dollar, trading at around par with its American counterpart, it ended the year at about $0.94 to one American dollar. That trend is expected to continue, and some economists think it will sink as low as under $0.90 within the next two years.
What do you think will happen with the Canadian economy in the next year? What would you like to see happen?