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Will Canada's economy gain momentum in 2017?

Will Canada's economy gain momentum in 2017?

India Blooms News Service | 28 Dec 2016, 06:43 pm
Calgary, Dec 28 (IBNS): Canada's business lobby expects the nation's economy to strengthen in 2017 but prefers to remain cautious nevertheless, according to media reports.

With stable oil prices, increased infrastructure spending, an improving US economy, new pipeline and still very low interest rates, captains of Canadian industries, particularly from the energy sector, believe the economy will look up in 2017.

With the decline in energy prices starting late 2014, oil companies reeled in investment spending and Alberta has lost 140,000 jobs since December 2014, the media reported.

Now, with the price of West Texas Intermediate hovering around US$50 a barrel, boosted by OPEC’s deal to cut supply, most economists expect business investment to pick up, reported Epoch Times.

In a statement  in December this year, Bank of Canada said "The effects of federal infrastructure spending are not yet evident in the GDP data."

The measures and expenditures needed time to work through the system unlike Canada Child Benefit.

An estimated 0.4 percent increase in GDP expected in 2017 due to infrastructure spending and business investments are likely to boost the housing market in 2017 believes the Royal Bank of Canada.

While most business executives in Canada believe that by the end of 2017, crude oil price is likely to shoot up considerably, as per the Gandalf Group's Quarterly  C -suite survey of 155 executives from Canada's largest companies, 69 percent said they expect the Trump administration to be supportive towards Canadian Oil & Gas sector.

Of those surveyed, 13 percent have set up their business plans in accordance with the upcoming change in the US administration.

However,  ATB Financial's Chief Economist Todd Hirsch said, "We don't see the oilsands as an enormous driver of future investments in the province [of Alberta ], at least not in 2017."

The Epoch Times quoted Hirsch as saying that Alberta's unemployment rate is likely to remain elevated at 9 percent during the first half of 2017 making the environment very much recessionary.

RBC's forecast of 2.2 percent growth of Alberta's economy, similar to the forecast of ATB Financial's 2.1 percent,  reflects that Alberta is likely to be among the best performing provincial economies of the year.

In the past few years, job growth and wage increase had been much slower in Canada compared to America, according to media reports.

More part time jobs were created rather than full time job which, according to RBC Deputy Chief Economist Dawn Desjardins, was predominantly a supply side issue than demand one.

RBC's November job analysis revealed that many of the jobs were created because of people who preferred this kind of jobs than full time, media reported.

Experts say it is hard to determine how long this ongoing split between part time and full-time jobs wil continue.

Desjardins said, "It could be the inflection point that people almost want to work more part time, or we could see the reverse as we go through next year".

The housing market is likely to remain volatile in 2017 as home sales rose to 4.4 percent in 2016 and prices rose to 9.5 for average house, according to market reports.

For 2017, RBC forecasts 11.9 percent decline in home resales and 1.9 percent in price fall.

Bank of Canada reiterated its warning about housing market vulnerabilities, about highly indebted homeowners and where price of houses rose too much too fast.

However, 72 percent of the business executives are optimistic about growth in the Canadian economy post US election as against 65 percent in the third quarter, media reports said.

But the biggest worry as per C-Suite is the way the Trump administration is likely to follow regarding free trade agreements and tariffs on Canadian exports.

Preserving free trade, tariff levels and market access, are the top issues for the Canadian Government to prioritize in its relations with the Trump administration as far as business leaders are concerned.

(Reporting by Chandan Som )

Will Canada's economy gain momentum in 2017?

India Blooms News Service
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