Growth has been modest in Canada, and this is expected to increase over the course of 2017 despite the uncertainty created by the renegotiation of the North Atlantic Free Trade agreement between Canada, the USA and Mexico as promulgated by the new US Administration.
Continued growth in the tourism sector will help drive this growth, and a depreciation in the exchange rate will fuel exports.
Fiscal stimulus, particularly in the infrastructure and social housing sectors, should support growth through 2017 and non-resource business investment is also forecast to rise.
But growth in housing investment is expected to slow as further supply comes onto the market. The housing markets in Vancouver and Toronto appear overheated when compared to the rest of Canada as low interest rates maintain the availability of cheap financing.
Looking forward, Canada’s economic performance is likely to see fortunes linked to the strength of growth in the US. Exports could be boosted by increased demand if US expansion accelerates, and an increase in government spending on infrastructure and social housing could fuel further growth. However, government intervention to curtail the overheated housing markets in Vancouver and Toronto may have a ripple effect through the broader economy.
Unemployment is projected to edge down in 2017 and inflation continues to be stable signalling healthy economic performance, whilst rising global commodity prices may see Canada boasting stronger growth.