Canada Economics Focus Will a housing downturn crash the economy? We expect higher interest rates to cause a 10% fall in house prices over the next 12 months and an even steeper fall in residential investment. With the rest of the economy still recovering from the... 9th May 2022 · 12 mins read
Canada Economics Focus Residential investment now the key downside risk The sheer scale of the surge in residential investment since the pandemic means it now presents a key downside risk to the outlook. At best, the widely held assumption that residential investment will... 6th July 2021 · 14 mins read
Canada Economics Focus Tackling climate change will be costlier than elsewhere Over the next few years, there is potential for increased “green” investment to more than offset the negative economic effects of measures such as further carbon tax hikes. But given the economy’s... 26th May 2021 · 16 mins read
Canada Economics Focus What if households unleash their savings? Due to lower spending and the generosity of government transfers, households are set to save $200bn more in 2020 than in 2019. With that rise equivalent to 14% of consumption, there are upside risks... 15th December 2020 · 11 mins read
Global Economics Focus Lasting blow to supply capacity is not inevitable It is by no means inevitable that the coronavirus crisis puts a big permanent hole in the supply capacity of economies (i.e. their ability to produce goods and services). With the right government... 29th June 2020 · 28 mins read
Canada Economics Focus How will the Bank respond to the next downturn? The risk of a recession is arguably higher in Canada than elsewhere and the low level of interest rates limits the ability of the Bank of Canada to respond. Even if the Bank utilises unconventional... 10th June 2019 · 1 min read
Canada Economics Focus Core inflation set to drop back Temporary factors that boosted inflation in 2018 are fading and recent declines in unit labour costs growth suggest that core inflation will fall this year. That supports our view that the Bank of... 19th February 2019 · 1 min read
Canada Economics Focus High debt burdens mean rate hikes will hit hard The large build-up in private sector debt over the last decade means that the Canadian economy is far more sensitive to interest rate rises than in the past. This increases the likelihood that the... 10th September 2018 · 1 min read
Canada Economics Focus Core inflation likely to remain below 2% target Although some measures have edged higher in recent months, we doubt that core inflation will return to the 2% inflation target anytime soon. Even if the output gap closes by the end of this year, the... 11th October 2017 · 1 min read
Canada Economics Focus Lower Canadian dollar points to rebound in inflation Although inflation has been uncomfortably low for some time now, the risk of a slide into deflation is still fairly modest. Long-term inflation expectations remain well anchored and the Canadian... 3rd March 2014 · 1 min read
Canada Economics Focus EU trade deal would provide only modest benefits The Canadian government's new free trade agreement with the EU, should it be ratified, will provide only modest economic benefits. Since this ratification will take a year or two, the trade deal does... 31st October 2013 · 1 min read
Canada Economics Focus In case of emergency: Blow the budget Fiscal policy might have to provide more stimulus soon unless economic growth improves materially. For housing bears such as ourselves, the potential for additional fiscal stimulus helps to limit the... 26th June 2013 · 1 min read
Canada Economics Focus Canada enjoying wealth advantage over US Based on our calculations of total domestic net worth, Canadians appears to be better off than their seemingly more affluent neighbours to the south. The problem is that the advantage Canada enjoys is... 18th April 2013 · 1 min read
Canada Economics Focus Lower inflation around the corner We expect annual CPI inflation to fall from an already muted 1.6% this year to only 1.2% next year, as GDP growth slows and economic slack increases. The outlook for 2014 looks much the same. 2nd October 2012 · 1 min read
Canada Economics Focus Business investment won't be the economy's saviour With exports hampered by the global economic slowdown and the nascent domestic housing downturn likely to hit housing investment and consumption too, a slowdown in Canada's overall economic growth... 31st July 2012 · 1 min read
Canada Economics Focus Canada's outperformance may not last much longer Canada's stronger economic performance over the last few years is largely explained by its stable banking sector, the continued boom in its housing market and, to a much lesser extent, buoyant... 14th May 2012 · 1 min read
