United States Impacting Canadian Growth
We have blogged numerous times about Canada’s outstanding ability to bounce back from the recession. A world leader in recovery, the nation continues to show signs of economic growth. Noticeably, Canada’s southern counterpart has not shared in this trend. The United States, it appears, is still experiencing a tough time recovering.
A QMI Agency report, published last Friday, mentions that the struggling U.S. economy may be holding back Canada’s growth. Economists, in fact, are lowering their expectations for Canada’s economic growth over the remaining months of 2010. Says the report, the American housing and labour markets are still showing some disappointing trends.
Says QMI: “The bank pared back its expectations for gross domestic product growth to 3.3% this year, down from 3.6%.” Perhaps, it’s surprising that the neighboring United States hasn’t impacted Canada’s financial status with greater severity in the past.
According to Craig Wright, senior vice-president and chief economist at RBC: “While Canada’s second-quarter growth put real GDP close to its pre-recession high, concerns in the U.S. and nervousness about the health of the global economy are weighing on the outlook for the second half of the year.”
Added Eric Thomson, an economist at the Conference Board of Canada: “The economic recovery remains well ahead of that of the U.S., which continues to experience modest economic growth and high unemployment.” The RBC went on to note that Canada’s output gap should actually be wiped out by the middle of 2012.
As mentioned in previous blogs, Canada has done a fantastic job in recovering all of the jobs lost during the recession. The QMI Agency reports that the jobless rate in Canada should continue to drop by as much as 7.3 per cent by the end of next year. It currently sits at 8.1 per cent.
It adds: “Still, headwinds from the U.S. led RBC to downwardly revise its GDP expectations for 2011 to 3.2% from 0.3%. The bank expects core inflation to remain on track at about 2%…South of the border, RBC is now banking on growth of just 2.7% this year and 3% in 2011, down from 3.1% and 3.4% respectively.”