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The Cana­dian econ­omy is well on its way to recov­ery, but has some dis­tance to make up yet, accord­ing to a recently released out­look from the Cana­dian Cham­ber of Commerce.

Accord­ing to the 2011 Eco­nomic Out­look report, the “Cana­dian econ­omy has tran­si­tioned into a period of sub­dued growth.”

After show­ing strength in a rebound after the reces­sion, Canada’s econ­omy lost some of ground, expand­ing at a mea­gre 2.3% annual rate in the Q2 of 2010 and 1% in Q3.

“The Cana­dian econ­omy is chug­ging along but not at full steam,” says Per­rin Beatty, Pres­i­dent and CEO of the Cana­dian Cham­ber of Com­merce. “A num­ber of fac­tors are expected to con­strain growth below 2.5 per cent in 2011,” says Beatty.

Con­tribut­ing fac­tors for this fore­cast include: Cana­dian house­holds focussing on pay­ing off exist­ing debt, and fix­ing debt prob­lems rather than acquir­ing new debt; ensu­ing cool­ing of con­sumer con­fi­dence; the cool­ing of a hot Cana­dian hous­ing mar­ket; the end­ing of fis­cal stim­u­lus; slow­ing US demand, and the ris­ing of the Cana­dian dollar.

Look­ing for­ward, there is antic­i­pa­tion that busi­ness invest­ment, par­tic­u­larly in machin­ery and equip­ment (M&E), is the likely leader in eco­nomic growth in 2011-12.

“With strong head­winds buf­fet­ing the econ­omy and com­pet­i­tive pres­sures remain­ing fierce, it is encour­ag­ing to see the increased push by Cana­dian com­pa­nies to invest in productivity-enhancing goods,” says Beatty.

M&E  imports saw  a 13-year high in Octo­ber, and a num­ber of fac­tors will help with increased cap­i­tal invest­ment going for­ward, includ­ing the strong Cana­dian dol­lar, the con­tin­u­a­tion of low bor­row­ing costs, high cor­po­rate cash bal­ances and the elim­i­na­tion of tar­iffs on a range of M&E.

“We believe Canada’s rel­a­tively strong fundamentals-an envi­able fis­cal posi­tion, a strong bank­ing sys­tem, widen­ing inter­est rate dif­fer­en­tials and favourable com­mod­ity prices-will save the loonie from exces­sive down­side pres­sures. These forces should hold the Cana­dian dol­lar near and slightly above par­ity in 2011 and 2012,” says Beatty.

The Cana­dian Cham­ber of Com­merce believes that the Bank of Canada will not be active until the sum­mer of 2011; they also feel that the overnight tar­get rate will reach two % by the end of 2011 and three % by the end of 2012. This goes along with con­cerns about Global instability.

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Con­tact the Jef­frey Team for more infor­ma­tion – 416−388−1960

Lau­rin & Natalie Jef­frey are Toronto Real­tors with Cen­tury 21 Regal Realty.
They did not write these arti­cles, they just repro­duce them here for peo­ple
who are inter­ested in Toronto real estate. They do not work for any builders.
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