Despite the aura of anxiety that surrounds Canada's economy lately, a new forecast shows the economy seeing a level of sustained growth not seen in years.
RBC Economics on Tuesday issued a report predicting the country's gross domestic product would finish 2010 with an expansion of 3.1%. That's expected to be followed by growth of 3.2% in 2011 and 3.1% in 2012.
This year's projected growth would mark the first time since 2005 that the country has seen a full year of economic expansion of 3% or more. It was close in 2006, when Canada's economy grew 2.8%. That ended a three-year run of expansion levels in the neighbourhood of 3% -- similar to what RBC is now predicting through until 2012.
The last few years have not been pretty for the Canadian economy. It shrank 2.5% in 2009 and inched ahead 0.5% in 2008.
Following the recession, Canada's economy saw significant recovery in 2009's fourth quarter and this year's first quarter with annualized growth rates of 4.9% and 5.6%, respectively. However that pace slowed to 2.3% in this year's second quarter and just 1% in the third.
The slowdown in growth was a result of a weakening housing market and "mild downturn in exports," RBC said. However, it said improving financial markets and a "very accommodative" monetary policy created by the Bank of Canada's 1% interest rate has set the stage for stronger growth.
RBC chief economist Craig Wright said that "financial conditions remain supportive of domestic growth, which will be the main engine of the expansion going forward."
Still, RBC considered the pace of growth expected in the coming years "moderate." That's true in comparison to the stretch between 1997 and 2000, when economic growth was running at annual rates of 4-5%.
RBC said unemployment -- which dipped to less than 6% at times in 2007 and 2008 -- will be just under than 8% as this year closes, fall to 7.4% by the end of 2011 and be about 7% by the end of 2012.
