National Bank of Canada Eco. & Strat. Team
National Bank of Canada
Highlights
While the Fed is winding down its asset purchase program, other major central banks, including those in Europe and Japan, are heading in the opposite direction, flooding markets with liquidity. The resulting low interest rates will help support domestic demand for the affected economies. Moreover, such divergence in monetary policy will push the US dollar even higher, something that should help exporters not just in Europe and Japan but also in emerging economies. We remain comfortable with our call for global growth to accelerate to 3.3% this year. But considering the mounting risks, particularly in China, we have lowered our call for next year by two ticks to 3.6%.
The U.S. economy finally seems to be taking off. The labour market is on a clear uptrend, helping support consumption spending. Business investment is also ramping up, as is the export sector. Upward revisions by the BEA, coupled with solid results so far in Q3, prompted a two-tick upward revision to our 2014 U.S. GDP growth forecast to 2.2%. With the economy poised to accelerate further, the Fed will be called to tighten monetary policy next year.
Canada is reaping the benefits of the U.S. economic rebound. The export outlook continues to improve, more so with a depreciated Canadian dollar. While domestic demand growth is likely to moderate after an unsustainably hot Q2, there will, however, be some support from investment spending in light of the better outlook and record corporate profits. We remain comfortable with our 2014 growth forecast of 2.3%.
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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