So the Bank of Canada announced today that interest rates would stay the same, which wasn't that much of a surprise. Perhaps more surprisingly, the BoC cut their GDP growth projections for 2016 and 2017. The GDP growth was cut to 2.0% from 2.3% in 2016 and 2.5% from 2.6% in 2017. The 2015 number remained at 1.1%.
I'm not particularly surprised, considering that I don't think that the Ontario economy in its present condition with low productivity growth can grow much past 2% a year. The current Ontario budget predicts growth of 2.7% in 2015, which will be impossible to meet now, with negative growth in the first quarter for Ontario and 1.1% GDP now predicted for the entire country. Job growth in Ontario in 2015 has also been almost non-existent. The budget also predicts GDP growth of 2.6% in 2016, which considering the large part of the economy Ontario makes up of the whole country and growth for the whole country is predicted at 2.0%, seems unlikely. That will have knock on effects on the Ontario budget revenues.
Ontario should be releasing second quarter numbers for GDP soon, which should be interesting.
Showing posts with label bank of Canada. Show all posts
Showing posts with label bank of Canada. Show all posts
Wednesday, October 21, 2015
Wednesday, April 15, 2015
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.
"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.
Thursday, July 17, 2014
Bank of Canada Lowers Canadian GDP Growth Predictions
The Bank of Canada has cut its predictions for upcoming GDP growth. From the Globe and Mail article:
"But offsetting the higher inflation, the bank lowered its economic growth forecasts for the rest of the year. It expects real gross domestic product to post annualized growth of 2.3 per cent in the third quarter and 2.4 per cent in the fourth quarter, down from 2.6 per cent and 2.5 per cent, respectively, in the April projections. It sees GDP growth of 2.1 per cent for all of 2014, down from 2.3 per cent previously, although its 2015 growth projection remains at 2.4 per cent."
Predictions of US GDP growth for 2014 have also been ratcheted down of late. So 2014 is now down to 2.1% instead of 2.3%. There's certainly a possibility of 2014 being below 2%. Obviously Alberta and Saskatchewan will grow a lot, however what happens with Ontario and Quebec will be key. Curiously Quebec did very well in the first quarter, but we don't know Ontario's number yet. In the 2014 budget document, Ontario is predicting 2.1% GDP growth overall for 2014.
I'm a bit surprised about 2015 GDP growth staying at 2.4%. I expect as we get closer to 2015, that estimate will go down.
"But offsetting the higher inflation, the bank lowered its economic growth forecasts for the rest of the year. It expects real gross domestic product to post annualized growth of 2.3 per cent in the third quarter and 2.4 per cent in the fourth quarter, down from 2.6 per cent and 2.5 per cent, respectively, in the April projections. It sees GDP growth of 2.1 per cent for all of 2014, down from 2.3 per cent previously, although its 2015 growth projection remains at 2.4 per cent."
Predictions of US GDP growth for 2014 have also been ratcheted down of late. So 2014 is now down to 2.1% instead of 2.3%. There's certainly a possibility of 2014 being below 2%. Obviously Alberta and Saskatchewan will grow a lot, however what happens with Ontario and Quebec will be key. Curiously Quebec did very well in the first quarter, but we don't know Ontario's number yet. In the 2014 budget document, Ontario is predicting 2.1% GDP growth overall for 2014.
I'm a bit surprised about 2015 GDP growth staying at 2.4%. I expect as we get closer to 2015, that estimate will go down.
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