Country Risk Service Canada 3rd Quarter

  • ID: 2196313
  • July 2013
  • Region: Canada
  • 21 Pages
  • The Economist Intelligence Unit
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The Conservatives hold an absolute majority in parliament, which will allow for a stable political environment and easy passage of legislation. The Economist Intelligence Unit expects the Conservative government to remain in office for the entirety of its term until late 2015, but the Liberals' challenge to the government is growing. The general government balance will remain in deficit; even so, 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 1.7% in 2012, we forecast the same growth rate again in 2013. Prospects for 2014-17 are better, although the high indebtedness of the household sector will hold back consumption spending. The Canadian dollar is vulnerable to swings in global risk appetite. The current account will stay in deficit during the forecast period, but the deficit will narrow. The Canadian dollar is forecast to slide against its US counterpart.

A fatal rail crash involving an oil tanker has moved the issue of oil transportation up the political agenda.

The BOC kept interest rates on hold in May, the last meeting before the new governor, Stephen Poloz, took charge. We do not anticipate that his arrival will materially change the monetary policy outlook.

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Country Risk Service Canada 3rd Quarter

Canada at a glance: 2013-17
Key changes from last month
Political outlook
Economic policy outlook
Economic forecast

Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk

Sovereign risk
Current assessment
Rating outlook

Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk

Central scenario for 2013-17: Political stability

Central scenario for 2013-17: Election watch

Central scenario for 2013-17: International relations

Central scenario for 2013-17: Policy trends

Central scenario for 2013-17: Fiscal policy

Central scenario for 2013-17: Monetary policy

Central scenario for 2013-17: Economic growth

Central scenario for 2013-17: Inflation

Central scenario for 2013-17: Exchange rates

Central scenario for 2013-17: External sector

Key risk indicators

Ratings summary

Quarterly indicators

International assumptions summary

Economic structure

Public finances

Exchange rates, interest rates and prices

Financial sector

Current account

Foreign payment and liquidity indicators

External trade

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