(November 9 – 12:20 ET) –
The economy was firing on all
cylinders in 1999, according to
Tim O’Neill, Chief Economist,
Bank of Montreal.
“Robust U.S. demand, a low-valued
currency, a much-anticipated
increase in disposable incomes and
investment in high-tech equipment
should continue to drive the
economy forward into 2000,” he said
today at a press conference. Mr.
O’Neill projects GDP growth of 3.4
per cent in 2000 down slightly
from 3.8 per cent in 1999.
He predicts the jobless rate in
Canada should average 7.4 per cent
in 2000, down from 7.8 per cent in
1999. Improvements in the
unemployment rate will be tempered
by increases in labour force
participation as previously
“discouraged workers” re-enter the
labour force, says O’Neill.
Underlying inflation will remain
low and short-term interest rates
will rise modestly next year in
response to rising U.S. rates. As
well, commodity prices will
strengthen on increased world
demand.
Mr. O’Neill projects continued
strong growth in the U.S. in 2000,
although down slightly from last
year’s near 4 per cent pace of the
last three years. U.S. GDP will
drop to 3.3 per cent from 3.8 per
cent in 1999. Inflation will
increase from 2.1 per cent in 1999
to 2.8 per cent in 2000, while
unemployment will continue to
decline.
Mr. O’Neill observed that there
is now a heightened focus in
markets on inflation, especially in
the U.S.
Regionally, Newfoundland,
Alberta, and Ontario will be the
growth leaders in 2000 and 2001,
says O’Neill. Increased offshore
petroleum production and
exploration underscore
Newfoundland’s strong performance,
while Alberta will profit from
higher oil and natural gas prices.
Ontario, meanwhile, benefits
disproportionately from the low
Canadian dollar and strong
U.S. economy next year.
-IE Staff
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