“November GDP data is likely to slow Canada’s economic performance, ending 2018 in a pretty disappointing fashion. Is this more than just a soft patch? We think so, and are revising down our growth expectations for this year,” note ING analysts.
Key quotes
“After a few months of subdued Canadian growth, a much-needed boost arrived in October (0.3% month-on-month), but we aren’t expecting any upside surprise in November. Our monthly GDP forecast is -0.1%, which would bring the annual figure to 1.6%.”
“Signs of an economic soft patch are creeping through. The majority of major economies are set to undergo a similar slowdown this year – including the US. But Canada will slow possibly more than we expected due to the below-par performance of the energy sector, and this weaker outlook will likely linger. This forms a large part of why we’ve revised down our 2019 growth expectations from 2.1% to 1.8%.”
“Economic fundamentals still look good. The unemployment rate is at four-decade lows, core inflation has remained around the central bank’s 2% target and we expect business activity (outside the energy sector) to improve. This is all good enough, in our view, to keep the Bank of Canada in hiking mode. For now, we see two rate hikes this year in the third and fourth quarter, though the risks are clearly skewed to the downside.”
Share
