Towers Watson predicts moderate growth for Canada

Canada’s top economists, strategists, and portfolio managers predict modest growth for Canada, continuing below-trend interest rates, modest inflation and average equity market returns over the next few years, according to Towers Watson’s annual survey of economic expectations.

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The study finds growth expectations for Canada are muted in the near term, but are more positive over the longer term, expecting above average growth at 2.5%.

Long-term growth expectations for the U.S. are also 2.5%, well below their historical average of 3.25%, reflecting continuing concerns over the magnitude of the U.S. deficit.

“We were initially surprised to see a convergence of expectations for Canadian and U.S. economic indicators,” says Janet Rabovsky, director of investment consulting services at Towers Watson. “Growth predictions may reflect recent studies that suggest the output gap between Canada and the U.S. has been overstated in the past, but could simply be a reaction to the relative magnitude of government deficits.”

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On a less optimistic note than last year, respondents predicted the Bank of Canada overnight rate would rise to only 2.0% between 2014 and 2017. Inflation is expected to remain controlled at 2%. Participants also forecast a Canadian dollar near parity with the U.S. dollar over the next 15 years.

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Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.