Capital Markets Flash

The Canadian economic setting: A slow but steady recovery

Volume 5, Issue 14 | November 20, 2012

2012 will mark the third year of recovery for the Canadian economy. On the plus side, employment and economic output have now surpassed their pre-recession levels and forecasts call for steady, but not spectacular, growth over the next few years.

Canada’s recovery, especially in employment, has been more impressive than most other developed countries, including the U.S. On the negative side, Canadians are needing to adjust to a weaker pace of economic growth than experienced pre-recession and our international competitiveness is challenged by weak productivity, a strong Canadian currency and weak growth in our major trading partners.

Highlights in this issue include:

  • Canada’s economic recovery
    Although all the numbers are not yet in, it appears the Canadian economy will grow just over 2% this year, just a shade higher than forecast in the July Capital Markets Flash.
  • The US economy is coming back
    The US economy is expected to grow a bit stronger than the Canadian economy in 2012 as well as in the two following years. This is partly because there is more excess capacity to be absorbed in the US.
  • Economic impacts of hurricane Sandy
    Hurricane Sandy walloped the US east coast in the final days of October. The principal concern is with the tragic loss of life, irreplaceable personal assets, personal incomes and serious disruptions in living conditions and personal inconveniences. From the economic perspective there was serious damage to infrastructure.
  • Implications of the US Election for Canada
    After several years of expensive and heated campaigning, the US was left with the same President, and a Republican House majority and Democratic Senate majority which kept US policy in dysfunctional gridlock. However, from the ashes of these remains there are distinct grounds for optimism in Canada.