Canada’s economy will take baby steps out of the woods in which it’s found itself for the last few years – but it WILL get there! Such are the findings from the Bank of Canada.
The central bank, in its Monetary Policy Report (MPR), released Wednesday, fleshed in the details after forecasting modest upgrade to Canadian growth projections for 2011 and 2012.
The detailed forecast shows that the Bank expects the economy to slow modestly in the first half of 2012 following stronger-than-expected gains recorded in the latter half of 2011. While growth is still forecast to accelerate in the second half of 2012, the average was trimmed back to 2.3% from 3.0% in the October MPR.
Growth forecasts have been revised to 2.4% for the year just ended, and 2.0% for 2012. The central bank added that the economy is to grow by 2.8% in 2013
RBC Economics commented that "the forecast now looks for business investment to make a slightly smaller contribution to growth in 2012 adding 0.6 ppt (percentage points), less than the 0.7 ppt added expected in October. Consumer spending is forecast to contribute 1.1 ppts, 0.1 ppt less than in the October forecast.
"Conversely," Canada’s largest bank continued, "housing, which was expected to be flat in 2012 is now forecast to add 0.3 ppt in 2012 and 0.2 ppt in 2013."
As to what these projections will mean for lending costs, RBC also says, "the (central) Bank's tweaks to its forecasts for Canadian growth when paired with heightened concerns about the risks to the global outlook, suggest that the chances of any near term change to the monetary policy is limited.
"The Bank's assessment that the risks to the outlook are 'roughly balanced' ", RBC concludes, "also supports the case for the Bank to maintain the current 1.0% rate until there is evidence that these risks are dissipating or that one is getting the firmer hand."
