Economists consulted by the federal Department of Finance increasingly see Canada’s economic growth as front-end loaded.

In Finance’s latest survey of private sector forecasters, the average GDP growth forecast for 2010 is bumped up to 3.5% from 3.1% in the March survey, and from 2.6% in the budget (based on a survey completed in mid-December).

However, the forecast changes suggest that this strong recovery will translate into slower growth in successive years, as the average forecast for the 2010-2014 period remains at 2.9%.

Indeed, the average forecast for 2011 is now down to 2.9% from 3.1% in March and 3.2% in the budget. Average calls for 2012 have also ticked down to 2.8%, and while 2013 is unchanged at 2.8%, the forecast for 2014 is down to 2.5%.

“Overall, the June survey results suggest that the near-term outlook has improved further since the March survey and has significantly improved since the December survey was conducted,” the Department of Finance says. “In particular, the National Accounts results for the first quarter of 2010 were stronger than expected by forecasters in both December and March, and recent indicators for the second quarter of 2010 suggest that the economic recovery is continuing.”

“As a result of stronger expected growth in 2010, the level of nominal GDP is expected to be about $24 billion higher in 2014 than projected in the budget and $10 billion higher than expected in March,” it adds, noting that this suggests that the medium-term fiscal forecast presented in the budget remains on track.

The average of private sector forecasts forms the basis for the economic assumptions used for fiscal planning purposes in the budget and the fall update.

The June 2010 survey includes the following 14 private sector forecasters: Bank of America Merrill Lynch, BMO Capital Markets, CIBC World Markets, The Conference Board of Canada, Desjardins, Deutsche Bank of Canada, IHS Global Insight, Laurentian Bank Securities, National Bank Financial, Royal Bank of Canada, Scotiabank, TD Bank Financial Group, UBS Securities Canada, and the University of Toronto (Policy and Economic Analysis Program).

IE