The economy in 2010 produced many surprises, but expect similar uncertainties in 2011.
A forecast report by Derek Burleton, deputy chief economist at TD Economics, expects Canada’s economy to grow by 2.5% next year and to create 250,000 new jobs.
In 2010, much of the economic growth came from the domestic economy, with aggregate spending from households, businesses and government increasing an unexpected 4%.
International trade, however, served as a drag on the economy with a strong influx of imports. Economic growth is expected to be more balanced in 2011 with an expected strengthening of U.S. economic growth and further gains in commodity prices.
While the Canadian dollar traded on par with the U.S. this week, TD forecasts the loonie to fall back down to the US$0.92 to US$0.95 range in 2011 as the U.S. dollar benefits from weakness in other global currencies such as the Euro.
While TD expects the Bank of Canada to increase its interest rates in the latter half of 2011, Canadian households and businesses will likely benefit from relatively low long-term borrowing conditions in the first half of the year with continued uncertainty in the global bond markets.
More details about the local impact of Europe’s debt crisis are available in a recent issue of Business in Vancouver. (See “Canadian homebuyers will benefit if these PIIGS don’t fly” – issue 1103; December 14-20.)