The Canadian economy had a pretty good year in 2017, with GDP growth accelerating to 2.9%, up from 1.4% in 2016 and only 1.0% in 2015. But last year was a tale of two halves, with exceptionally strong growth in the first half of 2017 and a marked slowdown to slightly below potential in the second half. Accordingly, although the Bank of Canada’s 2.2% forecast for 2018 represents a slowdown from 2017 as a whole, it would require an acceleration relative to the pace of growth in the second half. With the surge in borrowing costs and tighter mortgage regulations expected to hit consumption and housing investment, we expect GDP growth to be only 1.5% this year.
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