“In all cases, a ‘ho hum’ economic performance appears to be the best we can hope for . . . Some help will come in the form of a Bank of Canada policy interest rate cut, but we expect that easing to be motivated more by shifting financial conditions back to 2019 levels, rather than initiating major stimulus,” said the report The Good, The Bad, and the Huh? A Look Back at the Canadian Economy in 2019, authored by Brian DePratto, TD’s Director & Senior Economist.
“Without a major catalyst in the form of a markedly improved external backdrop, the Canadian economy appears set to turn in an echo of last year’s growth performance.”
The report said last year delivered a mixed bag, with several key themes emerging. On the plus side, labour markets performed well over 2019 as a whole, and housing markets have gotten back on track. However, the trend in both these areas cooled markedly as winter approached.
“The negatives include effectively zero productivity growth and a household spending trend that continued to soften. Stretched household balance sheets became evident not only in spending, but in insolvencies as well,” said TD.
“Business investment was revised higher on surprising strength in oil and gas spending. That said, the sector remains challenged, with spending well below historic highs in the wake of heightened uncertainty.
“Whether good or bad, these key themes all point to the same starting point: a modest economic growth outlook punctuated by cautious consumers and ongoing external headwinds to investment.”
In its most recent economic forecast, TD said the Canadian economy would grow by 1.7 per cent in 2019 followed by a slight decline of 1.6 per cent growth this year then growth of 1.8 per cent in 2021.