In this edition, we take a closer look at the economic outlook in Canada, and the fiscal policies that are supporting the economy’s improving trends as well as what it means for the Bank of Canada as we move forward.
Theme 1: Economy surprises to the upside
We have seen a steady upward revision to global growth forecasts, including for Canada. We will look for robust global growth of about 6% this year. This lays the groundwork for stronger Canadian export growth that will provide a lift to the economy in 2021.
Theme 2: Expansionary fiscal policy continues
Expansionary fiscal policy has provided a lift to Canada’s growth prospects, with the consumer sector benefitting from income supports. The latest budget signals these trends will continue with sizeable fiscal support to remain in place for the Canadian economy as we move through the year.
Theme 3: Bank of Canada gaining attention
The Bank of Canada made a significant upward revision to the forecast for Canada’s economy to 6.5% in 2021. This stronger performance will see the Canadian economy return to full capacity earlier than was previously expected and will likely see the bank raise the policy rate in 2022, a year ahead of their January projection.
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