Better times in store over next two years

Ottawa – Following subpar growth in 2012 and 2013, Canada’s economy is expected to grow by close to 2.5% annually over the next two years, according to the Conference Board of Canada’s Canadian Outlook-Autumn 2013. Highlights from the outlook include:

• eal gross domestic product (GDP) is expected to grow by a tepid 1.8% in 2013.

• lthough risks to the global economy remain elevated, an acceleration in Canada’s export volumes is expected to power higher GDP growth in 2014 and 2015.

• he federal government and every province except Saskatchewan ran a fiscal deficit last year. All jurisdictions have plans to restore a balanced budget in the medium term, but rebalancing the books is not automatic.

The federal government announced in October that its 2012-13 deficit had come in at $18.9 billion, $7 billion less than its target. Yet, balancing the books in 2015-16 will remain a challenge. Low inflation means that the federal government is likely to take in lower-than-forecast revenues during the 2014 to 2016 period. As a result, the federal government may have little or no revenue cushion to meet its balanced budget objective, and will have to maintain its program of spending restraint in government operations.

“The federal government is essentially a year ahead of its deficit-reduction schedule,” said Pedro Antunes, director, National and Provincial Forecast.

Stronger growth in real gross domestic product is expected to come in part from an acceleration in export volumes. The export sector started strongly in 2013, but weakened as the year went on – overall growth in exports is expected to come in at just 1.4% this year.

Better times are in store over the next two years, due to improved outlooks for the US and global economies. Total exports are forecast to grow by 3.7% in 2014 and 4% in 2015.

In addition, the domestic economy should keep humming along in 2014 and 2015, thanks to low interest rates and improving business and consumer confidence.