The U.S.-China trade dispute and Brexit are dragging on, and their effects are spreading. Canada’s economic growth slowed sharply in the fourth quarter. The OECD painted a gloomy picture of the outlook for several countries. And even Americans — enjoying the best jobless rates in decades — haven’t opened their wallets as much as expected.
Yes, momentum has shifted downwards, but it hasn’t stalled, according to the latest take on the economy from RBC Economics. We’ve reduced our growth forecasts for Canada and the U.S. this year, but strong labour markets on both sides of the border, as well as rising wages, will continue to provide some support to the countries’ economies.
In 2019, the U.S. economy will grow faster than Canada’s, at 2.4%, which will help support Canadian exports. In Canada, we’re predicting overall growth of 1.5% this year, as lower oil prices and market-access issues continue to weigh on activity in the oil patch. Households are also contending with rising interest rates.
But there are bright spots provincially: British Columbia should see growth of 2.5% this year thanks to a massive LNG project underway, and Newfoundland and Labrador will return to growth mode after a tough 2018. Outside of the energy sector, we expect business investment to remain positive.
There may be less momentum, but there’s still momentum in the Canadian economy.
Macroeconomic Outlook
Provincial Economic Outlook
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