A recent market commentary by BMO Harris Private Banking has a cautiously optimistic take on the global economy, which could mean good news for Canada.

The report suggests that a calmer political atmosphere and strong housing, retail and jobs numbers will bolster U.S. economic growth in 2013.

The strengthening housing market, driven by better price levels and an increase in housing starts, is the keystone to the slow but steady U.S. recovery, says Richard Mason, head of investment management at BMO Harris Private Banking in Toronto, because of its connection to retail sales.

“The bigger driver for the U.S. economy is really the retail consumer,” he says, “and that is driven quite strongly by what’s going on in the housing market.”

That good economic news in the States will have a positive effect on Canada’s economy, which BMO expects to have only modest growth in 2013 due to weak consumer sales and a declining housing market.

“We continue to do by far our largest amount of trade with the U.S.,” Mason says. “So, that will benefit Canadian companies, it will benefit the Canadian economy.”

The BMO report also suggests that China will see stronger economic numbers this year, which could work to the advantage of the Canadian resource sector.

“Canada’s benefited from growth in China for a number of years and we believe will continue to do so,” says Mason. “Certainly, the resource sector is a way to play Chinese growth through Canada.”

The report indicates that China’s economic growth could surpass 7.5% in 2013. The recent uptick in the Chinese economy is the result of improved manufacturing activity, the likely conclusion of policymakers’ tightening of money supply and credit and the improvement in both the purchasing managers’ index and retail sales. In addition to the resource sector, Mason also says that any large-cap, multi-national company, in Canada or the U.S. that does business with China will also benefit from a recovering Chinese economy.

In terms of investing to take advantage of the expected, albeit modest, global growth, BMO Harris Private Bank is overweight in equities, particularly in the U.S. and Canada. However, when looking for investment opportunities within that asset class, says Mason, it’s important to focus on quality.

“We continue to focus a little more on dividend paying companies both in Canada and the U.S.,” he says. “So, focusing on good quality companies that have sustainable earning profiles and that are continuing to grow their dividends.”