Canadian Economic Indicators Show Healthy Growth

By Benjamin Bach, the Wealth Team on June 12, 2010 in Featured Articles, Real Estate Investment

Canada’s economy grows at fastest pace in a decade: RBC Economics

Canada’s gross domestic product is projected to grow by 3.6 per cent this year, according to a new forecast from RBC Economics.

This follows real GDP growth of 6.1 per cent in the first quarter, which RBC says was the fastest pace in over a decade.

Chief economist Craig Wright says the economy is surging ahead on domestic demand and growth in consumer, housing and government spending.

RBC Economics says the economy should continue to show gradual improvement as businesses rebuild inventories following a sharp reduction during the recession.

Wright says looking ahead, ”positive signs in the job market indicate that the recovery will continue in the near term.”

The bank forecast pegs unemployment to average 8.0 per cent this year before falling to 7.3 per cent in 2011.

It says GDP is expected to rise 3.5 per cent in 2011 and core inflation rates to remain just below two per cent, as the Bank of Canada slowly reduces the amount of policy stimulus and raises interest rates.

And what effect will this have on mortgage interest rates?

Sal Guatieri, Senior Economist, BMO Capital Markets says that “While short-term interest rates are not expected to rise rapidly, they are expected to increase about three percentage points by the end of next year.”