Every year, the Business Development Bank of Canada (BDC) reports on what to expect economically from the year ahead. Pierre Cléroux, one of the top economists in the country, and his team of experts at BDC create the forecast. We’ve distilled the 5 most important takeaways for the Saskatoon Region.
Slower Growth is the New Normal
The days of 3%-4% growth are no longer the norm. Political and trade tensions in 2019 contributed to a slowdown in the world economy, which in turn slowed Canadian growth. We can now expect growth in the coming years to be lower than it used to be.
Unemployment is Low
While Canada’s growth is slow, unemployment is at one of the lowest levels in the last 40 years, with a rate of 5.6%. There’s a labour shortage in almost every part of the country, and we can expect this trend to continue as baby boomers retire. Canada will need to drive growth through immigration, while businesses need to invest in technology, hiring, and training.
U.S. Performance Means Good Things for Canada
Since the United States is Canada’s main export partner, accounting for 75% of our exports, changes to the U.S. economy affect us substantially. The U.S. economy has seen exceptional performance recently, operating at full capacity, and this means Canada’s economy will likely perform well in 2020.
Canadians Have Record Debt
Unfortunately, Canadian consumption is constrained because of record highs in household debt. In 2019, the ratio of credit market debt (including mortgages) to disposable income reached 174%, limiting growth in the labour market. The good news is that mortgage rates have been stabilizing, thereby helping the housing market. Interest rates are expected to remain steady throughout 2020.
Saskatchewan Will Grow
In 2019, Saskatchewan barely made it past 0.5% growth. As oil prices declined, so did business investment. Tensions between Canada and China strained the economy, primarily affecting agriculture through bans on canola, soybeans, and peas. This year, however, Saskatchewan is expected to see growth of 1.3%, mainly because of recovery in the oil sector.
Learn even more about the outlook for the year at our SREDA Forum 2020, where BDC’s Director of Economic Research, Michael Cocolakis, will be speaking.