Canadian economy likely to expand 2.7 pct in 2017, but decelerate markedly in 2018 - Scotiabank

In the first quarter of this year, the Canadian economic growth accelerated unexpectedly at a rapid rate of 3.7 percent on a sequential basis. Economic activity continued to be led in a lopsided fashion by consumer demand and residential investment; however, the first quarter also gave some tentative proof of a solid rebound in business investment, noted Scotiabank in a research report.

This emerging widening of the sources of private sector growth at the same time as public infrastructure spending is to move ahead supports another upward revision to the growth forecast. According to Scotiabank, the Canadian economy is expected to expand 2.7 percent for the whole of this year, about double the central bank’s estimate of Canada’s potential.

If the forecast is realized, this would be the highest annual growth pace since the 3.1 percent rate recorded in 2011. This would make Canada one of the most rapidly growing nations in the industrialized world. However, the economy is expected to markedly decelerate next year. Canada’s GDP growth is likely to slow down to 1.9 percent in 2018, indicating that the economic activity would continue its shift to a more durable mix of sources in the coming years, added Scotiabank.

At 23:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was neutral at -30.1449, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at 2.95072. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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