The European debt crisis, subpar economic growth in the U.S. and an overstretched Canadian consumer will limit Canada's economic growth to 2.2% in 2012 and 2.4% in 2013, according to the Conference Board of Canada's Canadian Outlook – Summer 2012.
In its spring 2012 outlook, the board forecasted growth in real gross domestic product of 2.3% in 2012 and 2.8% next year.
Pedro Antunes, the Conference Board's director, national and provincial forecast, said, "Even though trade links between Europe and North America are of secondary importance to Canada and the United States, the ongoing fiscal and financial difficulties hobbling many European countries will continue to play havoc with the whole global economy.
"Business leaders in Canada and the United States – as well as households in both countries – are keenly aware of the precariousness of the global economic health."
The board said Europe's financial woes continue to affect confidence, stock and commodity markets and hiring in the U.S. and Canada.
Even if a deeper European crisis is averted, the U.S. economy is expected to muddle along with growth of just 2.3% this year. This weakness south of the border is holding back exports for some industries, although strong resource sector development will help generate solid gains in total merchandise exports, said the report.
Canada's domestic economy is also feeling the pinch, according to the board. It predicts the federal and provincial austerity plans will reduce the public sector's share of overall gross domestic product over the next four years.
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