Canadian Recovery To Pick Up Following Subdued Q221

• Fitch Solutions expects the Canadian economy will continue to rebound from the COVID-19 pandemic and grow 5.9% in 2021 and 3.7% in 2022. In Q221, real GDP expanded 12.7% y-o-y on a seasonally adjusted basis but contracted 0.3% q-o-q, due to weak exports and a slowdown in residential investment.
• Additionally, a strengthened labour market and looser public health restrictions will underpin 5.3% private consumption growth in 2021 and 4.4% in 2022. In H121, private consumption increased 6.2% y-o-y, and elevated economic sentiment suggests that household spending will remain strong in the coming months. As businesses rehire more workers to fulfill higher demand, Fitch expects that unemployment will fall to 6.8% by end-2021, from 7.5% in July, raising household incomes.
• Furthermore, in the FY2021/22 budget, the government extended the Canada Workers Benefit and several other stimulus measures to support low-income and unemployed workers, offering additional tailwinds to private consumption. These measures, combined with Canada’s robust COVID-19 vaccine roll out, will sustain a rebound in commercial activity in the short-to-medium term.

(Source: Fitch Solutions)