Canada’s economy shook off last year’s growth slump in Q1 2013, as real GDP grew at a healthy 2.5% annualized pace driven by a stronger trade performance.. However, the remainder of 2013 looks more uneven, as a sub-par external backdrop and subdued domestic demand should hold growth in Canada’s economy to a modest 1.7% pace this year.
• Next year, one ofthe biggest positivesforCanada is a strengthening U.S. economy.As fiscal drag in the U.S. abates laterthis year, better U.S. demand forCanada’s exportsshould help underpin a healthier 2.4% growth rate in 2014.
• The national jobless rate is likely to hold above 7% in 2013, before heading modestly lower in 2014.
• A cooling resale housing market should curb the pace of household debt growth per year, keeping to the debt-to income ratio stable, but constraining consumer spending growth over the medium term.
- Amid rising inventories of newly completed homes, residential construction is expected to be a softspot.
- Mortgage rule changes often prove to be temporary; after falling sharply in 2012,home sales have since stabilized, as low interest rates support demand. Most of the unwinding of a likely moderate over-valuation should occur in 2014-15, as interest rates start to grind higher.
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