The economy is set to re-ignite as the vaccination program provides a way out of lockdowns
The pandemic remains a significant threat to the Canadian – and of course global – economy, but there are better times ahead.
Forget about the first three months of 2021; infection rates have remained high leading to widespread restrictions on our lives and businesses. The Conference Board of Canada predicts growth of just 0.7% (GDP) for the first quarter of 2021.
However, things are set to improve and at year-end we could be looking back on a year of overall strong growth; sentiment shared by RBC GAM in a recent global investment outlook.
The Conference Board’s latest outlook, published Tuesday, calls for a 5.8% growth in GDP this year with a further 4% gain in 2022 as the gradual reopening of the economy combines with higher consumer confidence.
The outlook highlights how close to 80% of the jobs lost during 2020 have already been recovered with unemployment in February at 8.2% having reached double-digit highs last summer.
It also expects inflation to remain within the Bank of Canada’s target range (at around 2%) allowing interest rates to remain on hold until early 2023.
Consumer confidence
The Conference Board has also published the findings of its latest Index of Consumer Confidence this week.
It shows that the index rose more than 14 points this month to 105.2, that’s 87% of its pre-pandemic level.
The share of respondents that think there will be more jobs in 6 months time reached an all-time high of 25%.
On their personal finances, respondents were also optimistic with only around one fifth feeling pessimistic.
“As we head into spring, consumer confidence in Canada is on the rebound,” said Anna Feng, economist with The Conference Board of Canada’s Economic Forecasting group. “People feel more confident about their current finances and future job prospects than at any time in more than six months. The positive sentiment should, hopefully, carry forward as we head into the second half of this year.”
NEW FORECAST: Our 2-year Canadian #economics outlook shows our economy will expand by 5.8% this year and 4.0% in 2022, thanks to #vaccination, which has led to a gradual reopening of the economy and boosted confidence. Read now:https://t.co/OoqkyzHd94#cdnecon #cdnpoli pic.twitter.com/dHJfNe2U9e
— The Conference Board of Canada (@ConfBoardofCda) March 30, 2021
