Canada Economic Forecast July 2009
Canada did not remain unaffected from the global financial crisis that hit the US and Europe in late 2008, especially given the dependence of its economy on the US economy. As a result of the economic crisis, Canadian GDP decreased by -3.7% in the fourth quarter of 2008 and by -5.4% in the first quarter of 2009.
With consumer spending dropping 3.1% in the fourth quarter of 2008 and 1.6 % in the first quarter of 2009, the Consumer Price Index for all items registered deflationary trends by decreasing 3.1% in the fourth quarter of 2008 and 1.6 % in the first quarter of 2009. Given the recent economic developments, BMO Capital Markets Economics predicts in its latest forecast released on August 7, 2009, that the Canadian economy will register a negative GDP growth of 3.3% in the second quarter of 2009 but return to growth in the second half of 2009, registering a 1.2% increase in the third quarter and 2.0% in the fourth. The unemployment rate though is predicted to continue increasing until the first quarter of 2010 peaking at 9.3%. Overall, BMO Capital Markets Economics predicts that in 2009 the Canadian economy will contract at a rate of 2.3%, but grow at the rate of 2.2% in 2010. The Economist Intelligence Unit (EIU) Canada economic forecast predicts a more severe real GDP contraction of 2.9% in 2009. The EIU predicts a return to very slow growth of 0.8% in 2010, which will accelerate to 1.8%, 2.4% and 2.5% in 2011, 2012, and 2013, respectively.
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