Will Canada outperform in 2015?

Canada may surprise to the upside in 2015.

Both banks and analysts are optimistic about the housing, labour and consumer markets, which is a marked improvement over last year. At the end of 2013, the housing and consumer sectors weighed heavily on the economy.

Also, despite this year’s slumping oil prices, exports are expected to outperform going forward. Outside of resource and energy commodities, analysts suggest demand will spike for autos, chemicals, aircrafts, and industrial and electronic machinery.

Read: Economy on track for increased growth

In fact, Export Development Canada (EDC) forecasts export volumes will be healthy. EDC chief economist Peter Hall recently told Canadian Press that the agency has “upgraded its outlook, and forecasts the value of exports will rise 10% this year, [and] 6% in 2015.

He adds, “Stripping out the impact of lower [commodity] prices, the pace of volume growth [for 2015] is expected to increase to 5%, and stay at that level for several years.” On the upside, EDC expects energy prices will bottom out in 2016 and 2017, and then rise modestly for oil, gas and base metals.

Read: Help clients look past volatile oil prices

In a December release, RBC Economics chief economist Craig Wright toed the same line. He said, “The decline in oil prices, and any weakening of investment in the oil and gas industry, will be offset by increased demand for Canada’s non-energy exports.

“On a national level, the net impact of lower oil prices will be negligible in terms of real GDP growth,” which the bank predicts will be 2.5% this year, 2.7% in 2015 and 2.1% in 2016.

Read: Expect 2.5% growth in 2015: RBC Economics

As well, he notes, “a firming in economic growth [could] convince the Bank of Canada to reduce the amount of policy stimulus by raising the overnight rate in the middle of [2015].”

The BoC isn’t as optimistic. During a speech in November, Governor Stephen Poloz questioned the sustainability of current export growth, and the strength of the job market. As such, the central bank may stand pat on rates longer than anticipated.

Read: Slow but steady for the BoC: Poloz

But one thing’s for sure: going into 2015, investors will keep a close eye on the BoC. In a recent report, Russell Investments suggests that although the economy may be healthier than the BoC claims, the central bank remains in a precarious position. So it needs to time its next move carefully, given higher interest rates will impact business investment, those who have debts, and overall economic performance.

Read: BoC in a risky situation, says Russell Investments

For more on how Canadian and global economies will fare next year, read:

BMO GAM favours U.S., U.K. and Canada

Brighter days ahead for provincial economies

Economies and equity markets to have weak 2015: CFA poll

Energy exports to fuel Canadian trade growth

Housing to stabilize in 2015

What’s on horizon for U.S. and Canada?

BoC unlikely to hike rates: CIBC

U.S. economy isn’t as strong as you think

Full recovery far off for Canada

International trade to drive Canada’s 2015 growth: Russell