National Bank of Canada Eco. & Strat. Team
National Bank of Canada
Highlights
While there are valid concerns about the global economy, such as the fragile situation in Europe and rebalancing in China, there are also positive factors that should not be underestimated. A resurgent U.S. will lead advanced economies, while emerging economies like India will benefit from improving U.S. demand, a stronger U.S. dollar and cheaper energy. We remain comfortable with our forecast for global GDP growth to accelerate to 3.6% next year.
The U.S. continues to outperform most of the other advanced economies, both in terms of growth and employment. Consumer confidence has soared to multi-year highs thanks to a solid labour market and lower gasoline prices, and that’s translating into increased spending. Investment is on the rise, buoyed by better growth prospects, while trade is also contributing to growth. But not all is rosy. While the private sector is taking off, a familiar risk, namely Congress, again threatens to derail the economy.
Thanks to significant upward GDP revisions by Statistics Canada, the slack in the economy has largely evaporated. That explains why core inflation this year has generally been higher than estimates by the Bank of Canada. The economy has done better than first thought, and with the U.S. resurgence, odds are that the momentum in exports, which has been the driving force of the economy this year, will extend into 2015. We remain comfortable with our call for Canadian GDP growth to accelerate to 2.5% next year. However, the BoC probably won’t alter its dovish message just yet given downside risks to the economy. The oil price slump isn’t good news, while the state of the global economy is also a source of concern to the central bank.
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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