Canada Economy on Firm Ground

Canada’s uncertain trade backdrop has not had the dampening effect on the economy you might expect, according to the latest Reserve Bank of Canada Economic Outlook Report. Consumer spending and business sentiment remains high, and there are signs of a modest firming in wage gains. RBC projects real GDP growth of 2.1% in 2018 and slowing slightly to 2% in 2019. While Canada’s economic performance has been uneven throughout 2018, RBC expects a bounce-back in Q4. Even with trade uncertainty reaching a near boiling-point, Canada’s trade gap with the US narrowed in the second quarter, with exports surging as US buyers got ahead of import tariffs. With tariffs being levied on both sides of the Canada-US border, exports and imports are forecasted to rise at a significantly slower pace in the months ahead. The Canadian dollar is down 4.3% against the US dollar compared to August 2017, but is holding steady against other major currencies. RBC forecasts that the Canadian dollar will trade in a range around 77 cents for the remainder 2018.