(January 25 – 11:00 ET) – The Conference Board of Canada is forecasting a booming Canadian economy in 2000. A surge in disposable income will fire consumer spending, it says. And the savings rate will increase from less than 1% in 1999 to 2% in 2000. It predicts that solid growth in exports, investment spending, and the construction sector will help drive the economy higher.
Kip Beckman, senior research associate in the Economic Forecasting Group, predicts growth of 3.5% in 2000, up from its 3.2% prediction in the fall.
The Conference Board assumes a U.S. slowdown will occur, slowing exports. Although Beckman says, “If the U.S. economy continues to defy conventional wisdom and keeps expanding at a 4% clip in 2000, real exports to the United States could easily grow at a double-digit pace again this year. That would boost our real GDP growth even higher than
predicted.”
The Board is calling for interest rates to tick up slightly in 2000, accompanied by minimal inflation. The loonie should average 69¢US through the year.
It ‘s forecasting another $3 billion in tax cuts in the next federal budget. The federal surplus is forecast to be about $8.7 billion for fiscal 1999-2000, but the Conference Board predicts it will drop to $3.8 billion in fiscal 2000-2001. It expects the government to continue to set aside $3 billion for debt reduction each year.
-IE Staff