Canadian Economy at a Glance

The economy will continue to grow but at a slower pace: As a new year opens, […]

Canadian Economy at a Glance

Canadian Economy at a Glance

The economy will continue to grow but at a slower pace:

As a new year opens, the Canadian economy looks poised to continue to grow in 2019 but at a slower pace due to the stronger headwinds it’s facing.

Chief among these is higher interest rates that will limit consumer spending and the growth of the housing market. At the same time, lower oil and other commodity prices will have an impact on business investment, especially in Western Canada.

A compensating factor will be stronger exports, but we still expect GDP growth to come in lower than the 2% achieved in 2018.

International environment remains positive:

On the positive side, the economy will continue to benefit from a healthy international environment in 2019 with the world economy continuing to grow at a solid pace.

Growth in most major developed economies should accelerate modestly, reducing their unemployment rates. We expect the U.S. to lead the way once again with solid growth in 2019. This performance by Canada’s No. 1 trading partner, combined with a lower Canadian dollar, will support exports in 2019.

Business confidence in Canada remains strong despite the many uncertainties buffeting entrepreneurs. However, this confidence is unlikely to translate into a higher level of business investment.

The bottom line:

After two years of solid growth, the Canadian economy is gearing down to slower pace in 2019. Interest rates are not likely to increase much in 2019, keeping the Canadian dollar in the low US75 cents range.

What does it mean for entrepreneurs?

  1. Opportunities for exporters remain enticing. U.S. demand is strong and the lower value of the Canadian dollar will favour exports.
  2. Retail sales growth is slowing as interest rates increase. Retailers should plan accordingly.
  3. As economic growth slows, interest rates will probably not increase as much as in 2018. That means it remains a good time to invest in your business, especially to offset the impact of a shortage of labour through the addition of equipment, machinery and technology.

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