Canada’s economic performance in 2015 might be summed up in four words: good news, bad news.
Low oil prices dragged down business investment — and much of the rest of the economy — so much that annual growth is expected to be just 1.2% in 2015, according to a quarterly economic forecast released Monday (September 21) by TD Economics.
The bad news is that Canada “fell into a mild technical recession in the first half of the year” and had its lowest annual growth since 2009.
“The good news is that growth appears to have resumed late in Q2,” the TD report said.
While annual growth may only amount to 1.2% this year, “the annual figure masks a rebound in the second half of the year, with growth of near 2.5% annualized.”
The loonie’s fall, brought on by low oil prices and the Bank of Canada’s decision to cut the benchmark interest rate twice since the beginning of the year, is boosting exports, with growth expected to hit 4.4% in 2016.
“Continued strength in exports will be supported by a Canadian dollar that is expected to fall to as low as 73 cents U.S. and by strength in U.S. domestic demand. The weaker currency will have a notable impact on exports of services, including tourism, which tend to be more sensitive to currency movements,” the report said, adding export growth is expected to drop to 3.5% in 2017 as the dollar eventually rebounds.
“The more pertinent factor to the sustainability of exports is foreign demand, which will remain intact south of the border. This will keep a sturdy foundation under exports.”
