Country Forecast Canada Updater
The Economist Intelligence Unit, April 2013, Pages: 16
The Conservatives hold an absolute majority in parliament, which will allow for a stable political environment and easier passage of legislation. The Economist Intelligence Unit expects the Conservative government to remain in office for the entirety of its term until late 2015, although the Liberals' challenge to the government will be revived by their new leader. The general government balance will remain in deficit, but the public finances are healthier than in other large economies, and the deficit is expected to decline at a moderate pace. The Bank of Canada (BOC, the central bank) will remain cautious over monetary tightening until the outlook for the global economy is clearer, but we expect a gradual monetary tightening to begin in the second half of 2014. After real GDP growth of 1.8% in 2012, we forecast slightly lower growth of 1.6% in 2013. Prospects for 2014-17 are more solid. The high indebtedness of the household sector will hold back consumption spending, however. The Canadian dollar is vulnerable to periodic changes in global risk appetite. The current account will stay in deficit during the forecast period, reflecting a strong loonie.
The Liberals have chosen a new permanent leader, Justin Trudeau, after an interim period since the election. Mr Trudeau is popular and should help the party to revive its challenge to the governing Conservatives. Yet, he is also vulnerable to accusations of inexperience.
The government's 2013/14 budget foresees a maintenance of the fiscal consolidation pace, but relies on economic growth largely to keep deficit reduction on track. We think the government may have to detail additional measures in coming years to achieve its planned fiscal path.
Country Forecast Canada Updater
Canada at a glance: 2013-17
OVERVIEW
Key changes from last month
Political outlook
Economic policy outlook
Economic forecast
Country forecast overview: Highlights
Country forecast overview: Key indicators
Country forecast overview: Business environment rankings
Country forecast overview: Canada's business environment at a glance
Policy towards private enterprise and competition
Policy towards foreign investment
Foreign trade and exchange controls
Taxes
Financing
The labour market
Infrastructure
Fact sheet
Outlook for 2013-17: Political stability
Outlook for 2013-17: Election watch
Outlook for 2013-17: International relations
Outlook for 2013-17: Policy trends
Outlook for 2013-17: Fiscal policy
Outlook for 2013-17: Monetary policy
Outlook for 2013-17: Economic growth
Outlook for 2013-17: Inflation
Outlook for 2013-17: Exchange rates
Outlook for 2013-17: External sector
Data summary: Global outlook
Data summary: Gross domestic product, current market prices
Data summary: Gross domestic product, at constant prices
Data summary: Gross domestic product by sector of origin
Data summary: Growth and productivity
Data summary: Economic structure, income and market size
Data summary: Fiscal indicators
Data summary: Monetary indicators
Data summary: Employment, wages and prices
Data summary: Current account and terms of trade
Data summary: Foreign direct investment
Data sources and definitions
Global data
Domestic data
Abbreviations
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