On the heels of the global economy blazing towards its strongest growth since 2014, Canada is set to post the best performance among the G7 this year, according to RBC’s latest economic outlook.
“Buoyed by consumer spending and housing activity delivering strong gains early in the year, RBC Economics expects real gross domestic product (GDP) to grow an impressive 2.9% in 2017,” the outlook stated.
RBC added that while 2018 is projected to be a bit slower, the Canadian economy will still experience an above-potential growth rate of 1.9% next year, with growth moderating to 1.6% in 2019.
“This was a highly unusual year for the global economy with heightened political uncertainty accompanied by strong financial market performance and accelerating economic growth,” RBC senior vice-president and chief economist Craig Wright said. “Canada’s robust growth in 2017 is likely to moderate somewhat in 2018 as key economic drivers shift, but we still anticipate the economy will continue to outperform its potential.”
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The major factors that would support economic growth next year are government spending on infrastructure and a moderate increase in business investment, RBC stated. Meanwhile, although Canadian exports might see a slight strengthening in 2018, “the outcome of the NAFTA negotiations has the potential to stymie both exports and investment next year.”
For the first time in 6 years, RBC projected all provincial economies to see growth in 2018, even though it would be at a slower pace compared to 2017 for most provinces.
“In many cases, including British Columbia, Ontario, Manitoba and Quebec, economic slack has diminished considerably following long periods of expansion, making it harder to repeat 2017’s rapid growth rates,” RBC explained.
Saskatchewan and Newfoundland and Labrador are the two provinces expected to defy this trend and grow faster in 2018 that the previous year.
“Saskatchewan’s economy should benefit from a rebound in its agricultural sector, while in Newfoundland and Labrador we expect a rise in oil production will more than offset a drop in capital spending and weakness in other sectors of the economy.”
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