The global economy is headed for stronger growth in the last half of 2013, which will boost Canadian exports and fuel Canada's gross domestic product growth by 2.8% in 2014, a new report from RBC Economics predicts.
The Economic and financial Outlook, released this morning (September 17), says the improving global economy and low interest rates will mean the Canadian economy will grow at "above-potential pace" in the last half of 2013.
RBC is predicting real GDP growth of 1.8% in 2013 and 2.8% in 2014.
"The improvements in the U.S. housing market, rising motor vehicles sales and increasing U.S. business investment in machinery will augment the rising demand for Canadian exports coming from the Euro-area and the U.K. as the pace of economic growth improves," said Craig Wright, senior vice-president and chief economist for RBC.
Canada's job growth has been volatile, the analysis concludes, but adds that August's job numbers are encouraging. Canada had an average gain of 12,100 jobs per month for the six months leading up to August.
"We expect this pace of job creation to rise slightly on average through the forecast," Wright said. "This continuing support to household spending along with the improving external environment and rising investment will allow overall GDP growth to strengthen in 2014."
Canada's unemployment rate – in the 7% to 7.2% range since November 2012 – is expected to decline to 6.6% by 2014.
Canada's resource provinces are expected to lead Canada's GDP growth. Newfoundland and Labrador will lead the way in GDP growth, the report concludes, followed by Alberta, Saskatchewan and Manitoba.
"The pace of economic growth in all other provinces will be below the national average of 1.8%," the report states.
Although exports of B.C. lumber, natural gas, coal, copper, gold and silver have been increasing, consumer spending and job growth has tempered growth.
"Effectively, there were no net jobs created between the summers of 2012 and 2013," RBC's September 2013 provincial outlook states.
However, provincial outlook predicts an increase in capital spending on major projects will accelerate B.C.'s growth 2.7% in 2014.
