Economic Outlook

Canada Economic Outlook

Canadian economic data releases continue to surprise on the upside. Overall, real GDP in 2017 is projected to expand by a sturdy 2.9%, up from 1.5% in 2016, before slowing again to (still-above-trend) 1.9% in 2018. Due to the recent faster-than-expected growth, the Bank of Canada (BoC) now sees the output gap closing before year-end 2017, and thus is projected to hike rates one more time this year, most likely in October, followed by three increases next year. However, the uncertainty around the pace and quantity of hikes in 2018 is quite high and depends on the path of inflation in the near term.