The Canadian economy will experience some modest growth in 2013, but due to challenging domestic and global economic conditions, improvement will be “tepid,” according to a CIBC World Markets report released this morning.
CIBC forecasts growth of 1.7% in 2013 – a rate the organization says will nudge the unemployment rate upward.
“Any time growth slows to a crawl, one has to worry that it wouldn’t take much to push the economy over the edge,” said CIBC chief economist Avery Shenfeld.
However, Shenfeld said that although employment dropped in January, total hours worked increased.
He also pointed out there are some positive signs that things may improve slightly. For example, he noted that auto sales appear to have rebounded, which he said is generally considered to be a sign of consumer confidence.
Shenfeld said the sluggish growth will keep the Bank of Canada from raising rates until Q3 of 2014 – two quarters later than previously forecast.
“Instead of smoothly passing the growth baton from governments and households to business spending and exports, there’s been a fumble,” he said. “Housing has slowed, as has consumer borrowing, and governments face pressures to tighten belts.
“But businesses aren’t opening their wallets.”
