Photo by Bill Barber
TD Economics hiked its growth forecast for the Canadian economy in 2011 from 2.6 per cent to 3.0 per cent on Wednesday as optimism among analysts prevails. TD said the country’s economy has been doing better than it expected so far this year, with a higher appetite for commodities and an improved outlook for Canada’s major trading partner, the United States.
Getting over the hurdle
“Canada’s economy has entered 2011 on a stronger footing than was envisioned at the time of our last quarterly forecast in December,” TD’s Chief Economist Craig Alexander said in a release. TD further estimates that the economy will create about 350,000 jobs in 2011, with the unemployment rate falling to 7.5 per cent by year’s end.
While the effects of last week’s earthquake in Japan have wreaked havoc on global markets, Alexander doesn’t expect it to “have a meaningful impact on the Canadian economy" since, in the long run, Japan represents only two per cent of Canadian exports. The bank said that the significant impacts are the flourishing recovery in the United States and crises in oil-rich nations in North Africa and the Middle East.
While the report seems to be advantageous overall, there are still domestic risks involved. TD mentions issues such as high household indebtedness and excessive prices in housing markets that could still prove to have a negative impact on the Canadian economy over the upcoming years.
