RBC Economics says Canada's economy is expected to perk up in 2014 thanks to strong growth in the United States.
The bank's latest economic outlook is forecasting real GDP growth in Canada of 1.7% in 2013, 2.6% in 2014 and 2.7% in 2015, supported by a pickup in exports and strengthening business investment.
RBC chief economist Craig Wright says a slow and sub-par recovery in the U.S. "has no doubt played a part in the underperformance of Canadian exports through 2013."
But Wright says looking ahead to 2014, RBC expects stronger growth south of the border will increase demand for Canadian exports, especially as the expansion fans out and business investment accelerates.
The report adds that extra support to external trade will come from a weakening Canadian dollar over the course of next year. The softer currency reflects a leveling off in commodity prices alongside a generally firmer tone for the U.S. dollar.
Canada's labour market has been "resilient" with 148,000 jobs created so far in 2013, the report notes, with the unemployment rate falling to a cycle low of 6.9%.
RBC says the job growth has driven up wages by close to 2% on average so far this year while inflation has only rising an average 0.9% pace. The bank says real wage gains will continue to fuel consumer spending.
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