Country Economic Forecasts > Canada

Real GDP contracted 1.6% annualized in Q2, the sharpest contraction since 2009, largely due to the impact of the Alberta wildfires. Looking beyond the transitory impact of the wildfires, we think that the underlying economic fundamentals remain fairly dim. Non-energy export growth is still on a fairly weak track, household debt burdens continue to rise, and housing prices in some at-risk locales (notably Vancouver) have begun to fall.Concerns over the strength of the economy were highlighted by the Bank of Canada's September policy statement. The central bank is now calling into question the potential strength of the economic recovery from the oil shock. The central bank's main concern is with non-energy export growth, which has disappointed in the wake of the plunge in oil prices and the resulting much more competitive Canadian dollar. We remain cautious on the outlook for Canada's economy and forecast real GDP growth of 1.2% this year and 2.0% in 2017.