Gap growing between emerging, industrialized countries
Canada can expect modest growth next year
LÉVIS, QUE.: Industrial countries are still trailing emerging nations’ economic growth, according to the most recent economic and financial outlook from Desjardins Group Economic Studies team.
The report says uncertainties are hindering global economic growth, especially in industrialized nations and particularly in Europe.
While economic recovery in G7 countries is still uncertain, emerging nations are posting impressive growth and real GDP is forecast to grow 6.1 per cent this year.
In the past few months, the strong loonie, soft US demand, and fast import growth has sharply deteriorated the trade balance.
But domestic demand will stay robust, thanks to non-residential investment and sustained consumer spending growth, the report predicted.
The Canadian economy will grow at a moderate pace in the coming quarters and 2011 will end with just 2.3 per cent real GDP growth, the report said.
With that mild growth, the Bank of Canada won’t return to key interest rate increases until July, it forecast.
The province’s housing market slowdown, the auto industry’s recent peak, and the strong loonie will hamper growth and GDP will rise just 2.2 per cent.
Quebec’s employment market saw a rapid recovery, but declining investment in public infrastructures, controlled government spending and the higher household tax burdens will curb growth. Real GDP will rise 2.3 per cent in 2011.
- Atlantic – 2.1 %
- Manitoba – 2.5 %
- Saskatchewan – 2.7 %
- Alberta – 3 %
- B.C. – 2.4 %
Waiting on the US
South of the border, there are signs of improvement but the job market’s is timid, curbing consumer enthusiasm in the next few quarters.
After gaining 2.8 per cent in 2010, US real GDP should advance 2.4 per cent in 2011 and 2.8 per cent in 2012.
Rising costs for most raw materials will keep the Canadian dollar entrenched above parity against the greenback in 2011, the report added.