The Canadian economy is rebounding from a weather-related winter slowdown and is poised to take advantage of stronger demand in the U.S., a new report says.
According to international forecasting house IHS Economics – formerly known as IHS Global Insight – growth will average 2.3 per cent this year, 2.5 per cent next year, and 2.7 per cent in 2016, with unemployment rates dropping to 6.5 per cent by the third year.
Alberta will continue to be the major driver of Canadian growth, IHS said, but Ontario – the country’s manufacturing heartland – is staging a comeback after two consecutive sub-par years.
Manufacturing in Ontario is projected to grow by 2.4 per cent this year and rising to 2.7 per cent in 2016, essentially matching the national average. Ontario’s goods-production sector, including manufacturing, should benefit from the increased U.S. demand, the report said, adding that the province’s under-performing jobs market will likely catch up to the national average of one per cent growth in 2014.
The 2016 IHS projection is half-a-point stronger than the Bank of Canada’s more modest forecast, but IHS chief economist Arlene Kish is confident the U.S. economy is ready for a major rebound. The U.S. accounts for more than 70 per cent of Canadian exports. “We did differ [from the Bank of Canada] in terms of 2016 economic growth,” Kish wrote in the report. “Part of this may be explained by the fact that IHS is more bullish on U.S. economic growth for 2016 and the impact it would have on the Canadian economy.”