National Bank of Canada Eco. & Strat. Team
National Bank of Canada
Highlights
Buoyed by the manufacturing sector, the global economy expanded further in the first quarter despite activity being hampered somewhat by bad weather in North America and Europe. China, however, seems to be sputtering as Beijing cracks down on credit and polluting industries, although 2014 growth may still end up close to the central government’s target thanks to the higher projected infrastructure spending. Overall, we remain comfortable with our call for the global economy to expand 3.7% this year.
After a weather-battered Q1, the U.S. economy looks poised to bounce back. Consumption can strengthen further on the back of an improving labour market and the end to household deleveraging, while prospects for investment spending are also good thanks to healthy corporate profits and a better economic outlook. We have raised our inflation forecasts to account for higher-than-expected food prices. Upward price pressures coupled with above potential GDP growth in 2014, should set the stage for Fed rate hikes next year.
Like its southern neighbor, Canada is set to see a moderation in growth in the first quarter of 2014 after a strong second half last year. Subsequent quarters, however, should be better as improving U.S. demand eventually translates into higher export growth for Canada, with the additional help of a more competitive Canadian dollar. The weaker loonie together with the narrowing output gap should keep upward pressure on inflation whose forecasts we’ve now upgraded a bit.
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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