Canada GDP Growth Estimates Cut, What About Ontario

The IMF has cut Canada's growth estimates:

"Canada’s output is expected to increase by 2.2 per cent this year and 2.0 per cent in 2016, the Washington-based IMF said in its spring World Economic Outlook released Tuesday.

In January, the global lending body predicted growth of 2.3 per cent in 2015 and 2.1 per cent next year."

That's not a big cut, but I think that's optimistic for 2015. It is interesting that 2016 is only 2.0 considering the poor first quarter 2015 number.
 
Now the Bank of Canada has cut as well:

"The bank now says the Canadian economy will grow 1.9 per cent this year, down from the 2.1-per-cent pace it forecast in January, according to its latest quarterly forecast, released Wednesday.

The projection is based on no growth in the first quarter, and annualized rates of 1.8 per cent, 2.8 per cent and 2.5 per cent over the following three quarters as exports, business investment and job creation rebound."

A prediction of 1.9% seems reasonable to me. The quarterly numbers are certainly interesting as the BoC assumes a snapback from zero percent growth in the first quarter to 1.8% in the second (which isn't in itself impressive). I think the big question mark for everyone is what growth in the second quartet going to be like. Is the first quarter zero growth a weather related anomaly (some predictions in the US like the Atlanta Fed are also low) or will it continue in the second quarter?

For Ontario, with a federal GDP prediction of zero, even with Alberta doing poorly, Ontario by virtue of its massive size can not have that high a number. Probably even more important for Ontario is what the US does in the second quarter. RBC had a March prediction of 3.3% GDP growth for Ontario which I don't think is going to be made now. Bizarrely Toronto still had year over year house price increases of over 10% in March. Ontario's economy is doing some strange things and the second quarter is going to be key.