The Canadian economy will strengthen this year due to recovery in the U.S., increasing oil prices and a low Canadian dollar, and British Columbia and Ontario are set to show the most significant growth, according to a Scotiabank forecast released January 17.
Real GDP is expected to increase 2.3% in the two top provinces, while nationwide growth is forecast to reach 2%. B.C. was Canada’s bright spot in 2016 with real GDP growth of 3.1%, so although the province remains at the top of the list, 2017’s forecast calls for a moderation of growth that will continue for the next two years.
“B.C. is weathering a significant slowdown in its housing sector, dampening related service activity and consumption into 2018,” Scotiabank said in the report.
“For the forest products sector in B.C. and other regions, the risk of adverse trade developments persists until a Softwood Lumber Agreement is signed.”
Nationwide growth will be held back in part by a cooling housing market across the country in response to new federal mortgage rules. As well, auto sales are expected to fall after four record-breaking years.
In 2018, Canada-wide growth is forecast to remain at 2%, according to the report.
The Conference Board of Canada also published a report January 17 in which it forecasts similar growth—around 1.9%—in 2017.
Matthew Stewart, the Board’s associate director of national forecast, said last year’s growth of 1.3% was held back by weak business investment and slow exports.
“Overall, we anticipate a better performance this year as the energy sector puts less of a drag on the economy, exports manage a slightly better performance and government stimulus ramps up.”
The Conference Board points to slowing residential construction and declining consumer spending as factors that will moderate growth this year.