E Canadian Economy Cooled In 2019, Even Though Labor Market Stayed Strong

The Canadian economy slowed last year to an estimated 1.6% pace, though the job market performed very strongly. 

Canada’s economy expanded at an unusually fast 3.5% annual rate in the second quarter, though the growth slowed to only 1.3% in Q3. Canada’s negative international trade performance in the third quarter was a major drag on the economy. 

Nonetheless, the Canadian housing market rebounded in 2019 at least in sales terms due to lower mortgage rates and continued rapid population growth. The previous year was extremely tough for the Canadian housing market, since Canada introduced tough new mortgage rules and also raised interest rates that year.

Canadian real GDP growth is expected to improve slightly in 2020 to about 1.8% due to a modest stabilizing in global growth and a boost from the Canadian government budget deficit, amounting to roughly 1.3% of GDP. Pipeline construction spending is also expected to increase in 2020. 

It is also assumed that trade tensions from a Canadian perspective will improve slightly primarily because of the expected ratification of the USMCA by the US and Canada. As well, with the signing of the Phase 1 trade agreement, it is likely that the US will be somewhat less belligerent with China on trade issues in advance of the November 2020 election date. 

Canadian GDP growth is expected to reach 2% in 2021, slightly faster than the 1.8% growth rate projected for the US. 

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