The pace of Canada’s economic recovery is expected to slow for the rest of the year due to a fragile rebound in the U.S.
According to the Conference Board of Canada’s Outlook Summer 2010 report, consumer spending has outpaced growth since the middle of last year and that is making the current pace of recovery unsustainable.
Pedro Antunes, director, national and provincial forecast, said: “This recovery has been very strong, in fact a little surprisingly strong over the last nine months, and it’s all been domestic strength.”
The Canadian economy is expected to grow 2.9% in 2011, down from 3.6% this year.
Antunes told BIV that low interest rates and stimulus spending to date have helped power an economic rebound within Canada’s borders.
But for that recovery to be sustainable, U.S. household spending needs to increase. However, that spending remains fragile in the face of weak employment and income growth. As a result, Canadian trade volumes are expected to contract and the ongoing strength of the dollar could further hurt exports.
A recovery in B.C.’s forestry sector will still be a ways off as the sector awaits increased U.S. consumer spending and demand for new home construction to return.
Said Antunes: “We don’t expect housing starts to get back to … the normal levels until 2014, so it will be a slow recovery and [then] there will be growth that will help the forestry sector in B.C.”