Canadian Manufacturing

Canadian economy to remain sluggish through 2016, but avoid recession, report says

Conference Board of Canada downgrades country's growth forecast

February 5, 2016  by Canadian Staff

OTTAWA—The Canadian economy is set to expand by a paltry 1.7 per cent throughout 2016, according to the latest Conference Board of Canada forecasts.

The think tank downgraded its Canadian growth outlook Feb. 4, saying it expects the country’s struggles to permeate beyond the energy sector.

“Although much of the recent weakness was contained to the energy sector, other areas of the economy, such as household spending, exports and manufacturing have failed to pick up the slack,” Matthew Stewart, associate director of National Forecast, the the Conference Board, said. “Stronger economic growth will not happen until next year when a recovery in the non-energy sector is finally expected to take hold.”

As oil and gas firms continue slashing away at their capital budgets, the research institute says the belt-tightening will not end there. It pointed to an expected decline in building construction this year as a result of sluggish demand and rising vacancy rates.


“At the same time, machinery and equipment spending has been hampered by weak business confidence, sluggish global growth and the impact of a weak loonie on businesses’ ability to purchase foreign machinery. In all, real business investment is expected to fall by 2.4 per cent in 2016,” the organization said.

One bright spot the Conference Board sees is the export market. It forecasts export volumes will grow 2.5 per cent this year, tacking 0.6 per cent onto the Canadian economy’s bottom line. Meanwhile, the think tank said the public sector could provide a much-needed boost to the economy as well. The federal government, as well as numerous provinces, are poised to pump billions into infrastructure throughout 2016.