Canada Economic Update – July 2014

The Canadian economy recorded a moderate 0.3% increase during the March quarter, 2014, impacted by weather related disruptions. Group Economics is forecasting a 2.3% expansion in 2014, followed by a somewhat quicker 2.5% in 2015

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  • The Canadian economy recorded a moderate 0.3% increase during the March quarter, 2014, impacted by weather related disruptions.
  • Group Economics is forecasting a 2.3% expansion in 2014, followed by a somewhat quicker 2.5% in 2015. Improved Machinery & Equipment investment, and a stronger contribution from net exports is expected to drive this outcome.
  • The Bank of Canada recently released its bi-annual Financial Stability Review. Some of the sources of vulnerability for Canada included: Elevated house prices; High levels of household debt; Canada’s high economic and financial dependence on commodity prices; and the strong correlation between US and Canadian 10-year bond yields.
  • The Bank of Canada, Canada’s Central Bank, is likely to maintain the Overnight rate at 1%, with any rate rise not expected until the second half of next year. The strength, or otherwise, of the Loonie (Canadian Dollar), will impact on its decision making, as the Bank of Canada would like to maintain Canada’s export competitiveness.

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