In its 2004 Economic Outlook, the Canadian Chamber of Commerce forecasts a better year for the Canadian economy. For 2004 as a whole, growth in real gross domestic product is expected to average around 3%, a big improvement over the 1.7% growth rate anticipated for 2003.

“We expect the Canadian economy to rebound in the coming year,” said Nancy Hughes Anthony, president and CEO of the Canadian Chamber of Commerce, in a news release. “A healthy U.S. economy should translate into stronger demand for Canadian goods and services but the domestic side of the Canadian economy will propel the economy forward in 2004.”

The Canadian Chamber expects that healthy gains in employment and personal income combined with low interest rates should continue to support moderate gains in consumer spending in 2004. In addition, business investment is expected to remain robust as corporate profits continue to improve and businesses strive to improve productivity. Lastly, the need to boost inventories bodes well for future production and will be a source of growth in 2004.

As for interest rates, the Canadian Chamber expects the Bank of Canada to ease rates early in the year if the Bank’s expectations for economic growth are not met for the last quarter of 2003 and the first quarter of 2004. However, as economic growth strengthens in the second half of 2004, and with the core rate of inflation expected to creep up, Canada’s central bank is expected to deliver, in total, a 50 basis points increase in the fourth quarter of 2004.

The Canadian Chamber is also anticipating further gains for the Canadian dollar in the year ahead. With the U.S. dollar expected to continue to weaken in 2004 versus most major currencies, the Canadian dollar is expected to appreciate to US79¢ by the end of 2004.

“There are significant risks to our outlook, most notably an appreciating currency and its negative impact on exports and economic growth,” said Hughes Anthony. “The effect of the sharp rise in the Canadian dollar is a major uncertainty at this time.”