National Bank trims growth forecasts for Canada

Citing local and international headwinds, the major bank announces a diminished outlook for the country’s economy as well as provincial economies

In its economic outlook report for Summer 2016, National Bank announced that it is adjusting its growth forecasts for Canada’s GDP, as well as its forecasts for the Canadian provinces.

The downgraded forecasts come as a result of a slew of calamities and problems, both local and international in nature.

“The poor handoff from the first quarter and the devastation caused by Alberta’s wildfires point to a contraction of Canada’s economy in the second quarter,” the report reads, estimating a dip of 0.1% from the country’s annual growth rate from the disaster, assuming that oil production was at half capacity for a month.

“Uncertainties created by Brexit could potentially cause a sharper-than-expected slowdown in overall global growth and hence hurt commodity prices and Canada’s export volumes,” the report explains further.

In the report, the National Bank forecasts real GDP growth of -1.5% quarter-over-quarter for Q2 of 2016. Forecasts for Q3 and Q4 are better, with predicted real GDP growth at 3.0% and 2.1% respectively. “Economic growth should bounce back in Q3 thanks to clean-up and rebuilding efforts and as oil production recovers,” it explains.

Some provinces also saw a downgrade in their annual economic growth forecasts:
Territory 2015 estimated real GDP
(% growth)
2016 forecast real GDP
(% growth)
Newfoundland & Labrador -1.9 -0.6
Prince Edward Island 1.6 1.3
Nova Scotia 1.0 1.1
New Brunswick 2.0 0.7
Quebec 1.1 1.3
Ontario 2.6 2.3
Manitoba 2.4 1.9
Saskatchewan -1.4 0.5
Alberta -3.3 -1.8
British Columbia 3.3 2.6
Canada 1.1 1.2
Source: National Bank Economic Outlook, Summer 2016

2016 real GDP growth forecasts for Prince Edward Island, New Brunswick, Ontario, Manitoba, and British Columbia were all lower than 2015 estimated real GDP growth scores. The rest of the territories are forecast to have higher GDP growth this year. Notably, Newfoundland & Labrador and Alberta are predicted to post negative real GDP for 2016, scoring -0.6% and -1.8%, respectively.

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