- Canada's economy is headed
for a slower 2019: RBC Economics downgrades 2019 growth
forecast to 1.5 per cent
- Coastal provinces are expected to lead GDP growth: B.C.
to grow 2.5 per cent, Newfoundland
and Labrador to grow 2.3 per
cent
- Momentum in the global economy is slipping: Investors
remain skittish and central bankers continue to be cautious
TORONTO, March 15, 2019 /CNW/ - Canada's economic growth will slow in 2019 as
global economic momentum fades and oil-sector woes at home weigh on
activity, according to the latest RBC Economic Outlook Report.
RBC Economics has downgraded its 2019 Canadian forecast to 1.5
per cent from 1.7 per cent. In addition to weakness in the energy
sector, RBC is projecting softer consumer spending as households
adjust to higher interest rates.
The severity of the energy-led downturn is expected to be
short-lived, however. RBC also does not expect a dramatic pullback
in investment such as the one that occurred in the previous period
of falling oil prices.
"The impact of the energy-sector weakness on the Canadian
economy is more limited when compared to the previous oil downturn
in 2015 and 2016," said Craig
Wright, Senior-Vice President and Chief Economist, RBC. "Our
forecast assumes that oil prices will hold around current levels
throughout 2019 and grind higher in 2020."
The Canadian economy will continue to get a boost from a strong
labour market, and projected growth of 2.4 per cent in the U.S.
should support Canadian exports.
Employment growth to remain strong
Canada's labour market is healthy with the
unemployment rate holding at more than a 40-year low. Wage growth
to date has been lackluster, but with more companies facing labour
shortages and more workers switching jobs, RBC expects faster wage
gains in the near future.
Canada's coasts lead the way
in 2019
The start of construction on a $40 billion LNG project is providing a
significant boost to B.C's economy. RBC forecasts the province will
grow 2.5 per cent in 2019, leading all Canadian provinces and
showing few signs of a slowdown in spite of home sales dropping
nearly 25 per cent in 2018.
Things are also looking up in Newfoundland and Labrador, which is expected to bounce back
after a weak showing in 2018. RBC forecasts real GDP growth of 2.3
per cent in 2019 – the second-highest pace in the country.
Momentum in global economy slowing
While global
financial markets have settled since December, investors remain
skittish and central bankers are sounding more cautious.
China's economy is expected to
slow in 2019 and its trade dispute with the U.S. remains unsettled.
Both the U.K. and European economies are struggling with the lack
of progress on Brexit. RBC projects global growth of 3.5 per cent
this year and little change in 2020.
Strong labour market conditions continue to lift U.S
economy
With continued job growth and rising wages, the U.S
economy is set to be a growth leader in 2019, although growth will
not quite reach 2018's strong pace. Consumer spending is expected
to remain healthy. RBC forecasts the U.S. economy grow at 2.4 per
cent pace in 2019 and less than 2 per cent in 2020.
A complete copy of the RBC Economic and Financial Market
Outlook is now available. A separate RBC Economics Provincial
Outlook assesses the provinces according to economic and employment
growth, unemployment rates, retail sales, housing starts and
consumer price indices.
About RBC
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a purpose-driven, principles-led approach to delivering leading
performance. Our success comes from the 84,000+ employees who bring
our vision, values and strategy to life so we can help our clients
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in the world based on market capitalization, we have a diversified
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more at rbc.com.
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SOURCE RBC