Strengthening Private Consumption, Robust External Demand Will Aid Canadian Recovery

• Canada’s real GDP growth is expected to rebound throughout the remainder of 2021 and into 2022. Fitch Solutions, has revised its growth forecasts to 6.1% for 2021 and 3.7% for 2022, from 5.3% and 3.4% respectively, due to its more upbeat outlook on the US economy that is expected to fuel Canadian exports and investment. 
• Elevated domestic savings and falling unemployment will drive private consumption in Canada. In Q121, national savings rose to 7.2% YoY, the highest increase in one quarter since 2014 and there is an expectation that consumers will spend more in the coming quarters to capitalize on their improving financial situation. 
• Sustained US demand is expected to drive real growth of 12.0% in Canadian exports in 2021 and 4.9% in 2022. The US economy, which purchases nearly 75.0% of Canadian exports, has been the fastest developed market to recover from the pandemic. In the year through May 2021, Canadian merchandise exports grew by 23.0% YoY, and given the enduring demand from the US for Canadian goods, it is expected that exports will continue to grow in the coming quarters.

(Source: Fitch Solutions)