Bad start to year to limit growth

OTTAWA — Canada’s economy will be all about the finish this year, and the TD Bank (TSX:TD) says it will be worth the wait.

OTTAWA — Canada’s economy will be all about the finish this year, and the TD Bank (TSX:TD) says it will be worth the wait.

The chartered bank issued a revived forecast for the economy Monday noting that the slow start, particularly from weather-related headwinds from the U.S., means that growth in Canadian gross domestic product will be held to a modest 2.2 per cent this year.

That’s one-tenth percentage point lower than the bank’s previous estimate and also south of the Bank of Canada’s most recent outlook, although the central bank will issue an updated outlook next month.

Meanwhile, despite the downward revision in this year’s forecast, the bank’s prediction for next year “has been raised a touch higher to 2.6 per cent,” TD chief economist Craig Alexander and economists Beata Caranci and Andrew Labelle wrote in a report.

“Continued low interest rates next year will support a fatigued domestic sector, while a lower dollar and a stronger U.S. economy will lead to an uptick in external demand.”

The big change in the forecast is the downgrading of U.S. growth from 2.7 per cent to 2.2 this year, attributable to the brutal winter and other temporary factors that shaved one per cent off U.S. GDP at the start of the year.

Canada’s economy tends to go in lockstep with the U.S. because about 70 per cent of all Canadian exports head south, so a loss of demand in America results in fewer external sales and less activity in the key export industries ranging from auto production to oil sales.

Fortunately, say the authors, the “die is already cast” for a second-quarter rebound in the U.S., which should set the American economy on the path to about three per cent growth for the rest of the year and 3.1 per cent in 2015.

In fact, the U.S. is poised to lead the G7 economies in growth in 2015, taking Canada’s economy along for the ride.

Conditions are not so great in the rest of the world, even if they are improving, the bank says.

The eurozone will barely eke out one per cent growth in 2014, although that’s better than the minus 0.4 retreat of 2013.

And China remains stuck in what for it is considered a moderate pace of growth of 7.4 per cent this year and 7.0 per cent in 2015 after running at about 10 per cent prior to the recession. China represents almost 15 per cent of the global economy.

Just Posted

Concern growing over poor hay crops

Hay yields in some areas half of what it was last year

Showers on the way for Red Deer

Seasonal weather expected

Vandal strikes downtown business

Window with PRIDE poster broken

See goats in action at Piper Creek Community Gardens

Learn about fundraising efforts to rebuild the barn

No new RNs hired to Red Deer hospital emergency department in a month: United Nurses of Alberta

UNA filed a grievance in June in response to what they say is a staffing crisis

Updated: SUV smashes through fences and deck in Anders

Driver taken to hospital after SUV veered off 30th Avenue into Anders

Cull hasn’t been able to solve bunny burden in Alberta mountain town of Canmore

CANMORE, Alta. — Problems persist in an Alberta mountain town overrun with… Continue reading

Canada should help Holocaust denier on trial in Germany: civil liberties group

OTTAWA — A civil liberties group is urging the Canadian government to… Continue reading

Westerner Days: Send us your photos

Your reader photo may just make the pages of the Adovcate.

Adam Henrique signs $29.1M, 5-year extension with Ducks

ANAHEIM, Calif. — Centre Adam Henrique has signed a $29.1 million, five-year… Continue reading

Fashion firms upend design routine to focus on speed, trends

NEW YORK — Prototypes? Passe. Fashion company Betabrand saw that knitwear was… Continue reading

Trimming and tidying: Perennials need care too

The great attraction in growing perennial flowers is that you never have… Continue reading

Johnny Depp settles lawsuits involving former managers

LOS ANGELES — Johnny Depp has settled lawsuits with his former business… Continue reading

Cubs’ Kyle Schwarber falls to Bryce Harper in Home Run Derby final

WASHINGTON — Nationals Park was eerily quiet late Monday when Kyle Schwarber… Continue reading

Most Read

Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month