Canada to ride U.S. growth wave, housing sturdier: poll

Thu Jul 11, 2013 12:59pm EDT
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By Deepti Govind

(Reuters) - Canada's economy will gather pace from a sluggish second quarter as it benefits from rebounding U.S. growth, but subdued domestic demand will still be a drag, a Reuters poll of economists showed on Thursday.

After surprising forecasters by growing at a much faster-than expected 2.5 percent annualized rate in the first quarter of the year, growth is seen slipping to 1.6 percent in the second quarter, then rising steadily.

The quarterly poll of 31 economists taken over the past week pegged Canada's 2013 growth rate at 1.7 percent, up from the 1.6 percent predicted in a similar survey taken three months ago.

Analysts slightly upgraded their forecasts due to the strong first quarter and expectations the improving U.S. economy will boost exports.

"We do anticipate ... a speeding up in growth for Canada starting in the latter part of this year and moving into 2014, and much of that will have to do with rebounding U.S. demand," said Emanuella Enenajor, an economist at CIBC World Markets.

Recent U.S. data releases, particularly stronger employment numbers, have painted a brighter outlook for the world's biggest economy and Canada's largest trading partner.

Economic growth across the border will average a higher 1.8 percent this year and quicken further to 2.7 percent next year, the July quarterly U.S. poll showed on Thursday. <ECILT/US>

By contrast, economists revised their 2014 Canadian growth forecasts, projecting a smaller rebound. Canada's economy is expected to grow 2.3 percent in 2014, down from April's 2.4 percent forecast.   Continued...

A builder works on the the roof of a new home under construction in the Montreal suburb of Brossard, August 10, 2010. REUTERS/Shaun Best