Canada's economy grew by 2.5% in 2011, down from the 3.2% rebound in the year before. Both households and businesses contributed 1.5 percentage points to overall growth last year. While the government sector added very little to growth, weak foreign demand growth plagued net exports which, for the tenth consecutive year, were a drag on the real economy. Looking ahead, we expect a similar showing from most of these sectors, with the main exception being the household sector. Falling house prices are likely to dampen overall household expenditures over the next few years, restraining future GDP growth.
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