(December 7 – 17:05 ET) – National Bank of Canada has released its economic outlook for 2001 and 2002. The bank’s comments are cautiously optimistic about the international, U.S., and Canadian economies.

National Bank says that the price of oil will move back to $28 a barrel in the medium term. It notes that economic activity is picking up in Asia, except in Japan, where the recovery is more timid. Europe’s economy is rebounding, despite inflationary pressures which has prompted the Central European Bank to tighten its monetary policy.

The National Bank’s projections for 2001 call for economic growth of: 3.8% in the United States, 2% in Japan, 3.8% in Canada, 4% in Ontario and 3.6% in Quebec

According to the bank, the U.S. employment outlook remains sound and interest rates are in a comfortable zone. This suggests that consumer spending could remain impressive in the U.S. over the next two years.

Moreover, the bank notes that machinery and equipment investment in Canada picked up, following a period of stagnant corporate earnings from 1996 to 1998. This paves the way for a return to higher productivity, although Canada lags behind the U.S. However, Canada’s high-tech sector will probably help to reduce the lagtime significantly.

Dominique Vachon, vice president and chief economist at the National Bank, points out that economic conditions in Canada resemble those in the U.S: “Exports are no longer the only drivers of growth. In Ontario, the growth in high-tech industries and the major tax cuts could help to offset the slowdown in the automobile sector.”
-IE Staff