Canada’s economy is expected to benefit next year from acceleration in the U.S. economy in 2011.
RBC forecasts the U.S. economy to grow 3.3% next year, with the pace increasing to 3.6% in 2012.
The bank’s report said the U.S. economy will likely slow in the fourth quarter of 2010, but accelerate sharply in 2011 thanks to recent measures meant to boost consumer spending and business investment.
The federal government’s latest tax package, combined with the Federal Reserve’s second round of quantitative easing, is likely to boost consumer confidence and result in stronger quarterly growth rates next year.
Strength south of the border should bode well for Canada’s exports, which are expected to rebound and improve the Canada’s GDP. The increases will offset some of the increased level of imports by businesses increasing their investment spending on imported machinery and equipment, which are relatively cheaper with a persistently strong Canadian dollar.
Gains in net exports will also offset some of the deceleration in consumer spending as households continue to focus on reducing their debt levels.