Chief economists at Canada’s big banks predict rocky year for economy

Canada is headed for a rocky year as low oil prices continue to drag on economic performance, the chief economists of some of Canada's biggest banks said Tuesday.

TORONTO — Canada is headed for a rocky year as low oil prices continue to drag on economic performance, the chief economists of some of Canada’s biggest banks said Tuesday.

Bank of Montreal chief economist Douglas Porter told a morning gathering of leading economists that it’s going to be a “very close call” whether the fourth quarter of 2015 saw any economic growth.

Canada’s resource sector has been slammed as the price of crude has fallen from a high above US$105 in June 2014 to below US$40 over the past few months, just as other commodities are at or near multi-year lows.

Speaking at an event hosted by the Economic Club of Canada, Porter said it looks like last year was one of the worst years for economic growth in decades outside of a full-on recession, and Canada is looking at a 2016 growth rate not much higher than last 2015.

The loonie, which has plunged as the price of oil has declined, also has further to fall, he said.

The negative outlook for oil, the differing policy directions between the Canadian and American central banks, and the strengthening American economy mean the loonie will fall below 70 cents US before it begins to recover, Porter said.

“The last line of defence for the Canadian dollar would be some stability in oil prices and resource prices, and we just don’t see that stability over the next few months.”

Canada’s dollar has been trading near 11-year lows for weeks but has remained above 71 cents U.S. since 2003.

Craig Wright, Royal Bank of Canada’s chief economist, said the cheap loonie and the American economic recovery should provide a boost to Canadian exports in the near future, although such a rebound hasn’t materialized so far.

Wright said Canada will depend more than ever on its largest trading partner for export growth, because of the faltering performance of the rest of the world including the European Union and China.

“The U.S is the bright shining star,” he said. “But it’s not a very bright sky.”

CIBC chief economist Avery Shenfeld said 2016 will be a disappointing year for the global economy at large, and Canada won’t be spared.

Yet by the end of the year, he said, investors may see better returns as the world looks ahead to a brighter 2017.

Just Posted

Red Deer Pickleball Courts officially open

Pickeball players have a place to call home in Red Deer. The… Continue reading

Updated: Red Deer policeman denies telling woman she had a ‘nice body,’ sex assault trial hears

RCMP officer on trial for sexual assault while carrying a weapon and breach of trust

Source of gasoline smell in north Red Deer still unknown

City staff continue to work with industrial company

Some central Alberta businesses pledge to pay youth $15 ahead of wage cut that kicks in Wednesday

Jo(e) Social Media Inc. and Kavaccino’s pledge to pay youth more than $13 an hour

Tributes to Michael Jackson flow on 10th death anniversary

LOS ANGELES — Michael Jackson’s estate paid tribute to his artistry and… Continue reading

Online shopping leads to mountains of boxes

As online shopping becomes ubiquitous, so do the boxes delivered to homes… Continue reading

Get tested for HIV on Thursday

Red Deer residents can take part in the second annual national HIV… Continue reading

Skinny Vancouver Whitecaps eager to pick up points on four-game road swing

VANCOUVER — The Vancouver Whitecaps know there’s work to be done as… Continue reading

World Cup exit shows Canada will miss the remarkable Christine Sinclair

PARIS — Christine Sinclair has put Canadian soccer on her shoulders for… Continue reading

Police release more than 1,000 files from Smollett probe

Chicago police on Monday released more than 1,000 files from the investigation… Continue reading

Tributes to Michael Jackson flow on 10th death anniversary

LOS ANGELES — Michael Jackson’s estate paid tribute to his artistry and… Continue reading

Alberta government, Opposition swap accusations, attacks in earplug debate

EDMONTON — Alberta’s earplug debate got louder Monday as the Opposition NDP… Continue reading

Most Read