National Bank of Canada Eco. & Strat. Team
National Bank of Canada
Highlights
The Fed’s surprise decision to hold off tapering is good news for emerging economies. Their borrowing costs should come down to more manageable levels after the surge in bond yields in the last few months, and help support the apparent rebound underway after an atypically weak Q2. Among advanced nations, Japan is likely to continue to lead the pack buoyed by Abenomics at a time when the US is being restrained by the drag from its government and Europe contemplates an untimely economic relapse.
Our forecast of an acceleration in US economic activity in the final quarter of the year now seems to be at risk given latest developments in Congress. Threats from some politicians to shut down the government and to default on US debt cannot be taken lightly given that those same tactics had devastating effects on the economy a couple of years ago.
The Canadian economy ran below potential in the first half of 2013, and it continued to do so in the third quarter. The Bank of Canada is accordingly set to downgrade its Q3 forecasts in the upcoming Monetary Policy Report, although it might stick to its message that the output gap is set to close by mid-2015. We remain less optimistic given our outlook particularly for domestic demand.
This presentation may contain certain forward-looking statements about the 2009 Economic and Financial Outlook. Such statements are subject to risk and uncertainties. Actual results may differ materially due to a variety of factors, including legislative or regulatory developments, competition, technological change and economic conditions in Canada, North America or internationally. These and other factors should be considered carefully and readers should not rely unduly on National Bank of Canada’s forward-looking statements. This presentation may not be reproduced in whole or in part, or further distributed or published or referred to in any manner whatsoever, nor may the information, opinions or conclusions contained in it be referred to without in each case the prior express consent of National Bank.
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