2020 will mark the 11th year of economic expansion in Canada and the U.S., a remarkable feat considering the elevated level of global policy uncertainty.

U.S.-China trade tensions as well as uncertainty in the wake of the UK election will continue to dominate the headlines, keeping businesses on edge and curtailing investment. But with central banks likely to keep interest rates low and policy support plentiful throughout 2020, we predict Canada and the U.S. will be able to muster at a least trend-like increase in GDP in the coming year. In Canada, all provinces are set to grow for the second consecutive year with western Canada showing acceleration while the east shows moderation.

Canada’s economy will be challenged by a soft U.S. industrial sector with the uncertain global backdrop likely to restrain both exports and investment in 2020. Provincially, this will be a bigger issue in Ontario which is highly exposed to global supply chains. Businesses have been shying away from investing in hard assets but continue to hire. Companies will find it increasingly difficult to find workers in 2020 resulting in a slowing in job growth. That said, Canada’s labour market will remain healthy, with competition for workers keeping wages running hot. Quebec businesses will need to be creative to fill the record level of job vacancies if the province is going to be able to continue its winning streak.

Income growth and low interest rates will help households manage their debt payments and support another year of moderate consumer spending. The housing market recovery is forecast to pick up pace in 2020 with Ontario and BC among the provinces showing the strongest advances.

The Bank of Canada didn’t follow the lead of other central banks in cutting interest rates in 2019 lauding the economy’s resilience. Against an uncertain global backdrop, the bank is keeping its options open and we expect will make one 25 bps insurance cut in the first half of 2020.

Read more on our macroeconomic outlook and provincial economic outlook.

Macroeconomic Outlook



Provincial Outlook



As Deputy Chief Economist, Dawn contributes to the macroeconomic and interest rate forecasts for Canada and the U.S. Before joining RBC, Dawn worked as a reporter for Bloomberg Financial News in Toronto covering the Canadian bond and currency markets. She also spent ten years as the Canadian bond market strategist for a major U.S. bank.

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