Canada’s Strong Economic Outlook, GDP will Grow 6.1% in 2021: OECD and CBOC

And for 2022, leading organizations forecast that Canada’s real Gross Domestic Product (GDP) will grow 3.5% to 3.8%.

The Canadian economy will bounce back strongly in 2021 and continue to grow at a steady pace in 2022, according to an upgraded national economic outlook by the OECD (the Paris-based Organization for Economic Co-operation and Development) and to the latest provincial economic forecast by the CBOC (Ottawa-based Conference Board of Canada).

This strong economic outlook, more significant than indicated by previous forecasts and expected to varying degrees in all Canadian provinces, will be fueled by the growing rhythm and coverage of COVID-19 vaccination, resulting reductions in COVID restrictions, and increasing activity in both internal and external demand, especially in energy, tourism, and exports. Other contributors to Canada’s economic recovery are the forecasted demand growth spurred by the fiscal package launched in March by the U.S., Canada’s own Federal and provincial economic measures, and higher worldwide prices for key commodities like oil.

There are indications in Canada’s most recent Federal Government Budget that, at least until the country is out of the global health crisis, it may keep in place some programs in support of businesses, families and individuals.


Canada Economic Activity is continuing to recover

very significantly

Canada Economic Activity Graph: Monthly real GDP, New Orders in Manufcaturing, and Employment

Source: Statistics Canada and OECD Economic Outlook Database


As the trend to lift public health measures in Canada continues through increased COVID-19 vaccination coverage, the second semester of 2021 is expected to show an expansion of consumer spending, as well as  significant improvements in the employment market. Further data from the OECD indicates that Canada’s Gross Domestic Product (GDP) per capita can be expected to recover to pre-COVID figures during the first half of 2022.


Canada Substantial Household Savings set for

Large Increase in Consumer Spending

Canada Household Savings as % of Disposable Income GraphSource: Statistics Canada and OECD Economic Outlook Database

The Bank of Canada recently reported that household savings across Canada rose to $180 Billion last year. 

A report by CIBC (the Canadian Imperial Bank of Commerce) published at the end of 2020 indicated that, in Canada, “Covid-19 has triggered the largest cash accumulation in recorded history. We estimate that households and businesses are currently sitting on no less than $170 Billion of excess cash.” 


Canada Household Income Gros while it declines in U.D., Germany and France


Moreover, as per a recent Huffington Post article, a poll conducted by Maru/Blue poll for CIBC, shows that Travel ranks first when surveyed Canadians were asked what do they intend to spend those extra savings on.  Investing more, continuing to build savings, and paying off debt come as the next priorities, according to the poll.

Canada Spending Intentions for Extra Household Savings

Source: OECD Economic Outlook 106 and 109 databases.


Canada’s Unemployment Rate continues to decline

Canada Unemployment Rate Continues to Decline

Source: OECD Economic Outlook 106 and 109 databases.


Meanwhile, the unemployment rates in Canada continue to decline as more and more Canadians go back to work, as a result of the easing of COVID-19 restrictions, the phasing out of some supports by the Government of Canada, and the uptake in the county’s economic activity.

For Employers in Canada, this means that new shortages in the labor market may be in the horizon, even sooner than expected.


All Provinces in Canada will see Economic Recovery in 2021

Per the latest forecast by the CBOC (Conference Board of Canada), a broad economic recovery is underway across Canada’s provinces.

The think tank based in Ontario, Canada’s largest province, is forecasting a steep bounce-back in real GDP to take place in every province across the country. According to this CBOC forecast report, engines for the rebound will be accumulated demand and cash savings.

Pedro Antunes, Chief Economist at The Conference Board of Canada, said that

“the news of successful vaccines against COVID-19 has provided optimism about ending the health crisis and lifting battered economies all around the world out of the deepest recession in modern times.”

He also indicated that

“consumers will lead the recovery over the second half of 2021 as COVID-19 cases dissipate and economic prospects and consumer confidence improves.”

Even as consumer spending bounces back, this report forecasts that household savings will remain strong in 2021, with an average of approximately $113 Billion or around 5 times the savings hold by households in the four years before COVID-19.

These are the highlights of the 2021 Canada Economic Recovery forecast by province, as reported by CBOC.

Alberta After experiencing a steep contraction in 2020 due to low Oil prices and COVID, Alberta will show a 6.4% real GDP increase in 2021, the largest across the Canadian provinces, along with a recovery in its labor market. This will be driven by the province’s accelerated application of vaccines, now including second doses; positive trends for commodity prices including oil and natural; and strong household finances.
British Columbia The province’s economy will recover its 2020 losses, growing 4.9% in 2021. Labor markets in B.C. are ahead of the rest of the country, having already recovered more of the jobs lost at the peak of the COVID pandemic.
Ontario Ontario is the largest province in Canada in terms of population. Its economy will show a real GDP growth of 4.5% in 2021, after a somewhat larger drop in 2020.  Ontario experienced more difficulties managing COVID-19 than other provinces, mainly due to a slow re-opening in the spring restrictions applied in Toronto, its largest city, for most of the year.
Quebec The CBOC forecasts that in 2021 Quebec’s economy will grow 4.5% per cent, followed by a 3.9% in 2022. This is despite the significant effect that new waves of COVID-19 had on the French-speaking province at the end of 2020.
Newfoundland This Atlantic province’s real GDP will grow 2.8% in 2021 and a strong 4.7% in 2022, after a contraction of 3.5% in 2020.
Prince Edward Island (P.E.I.) Prince Edward Island’s economy experience a 4.3% contraction in 2020, the largest in its history.  However, the islander economy will grow 4.9% in 2021 and 5% in 2022.
Nova Scotia Also situated in the Atlantic, Nova Scotia’s economy will show a real GDP bounce-back of 4.1% in 2021. This economic recovery (after a loss of 4% in 2020) will be fueled by the lifting of COVID-19 restrictions and a sharp improvement in the labor market, expected to be particularly strong in the services sector.
New Brunswick The province’s expected 2021 real GDP growth is 3.4%. This follows a contraction of 4.1% in 2020, smaller than in most other provinces. This smaller 2020 contraction was achieved by New Brunswick’s above-average control of COVID-19 cases, which allowed it to implement milder shutdown actions than other provinces.
Manitoba Manitoba’s economy will grow 4.3% in 2021 after a 4.% decline in 2020.
Saskatchewan The province’s economy will recover by 5.4% in 2021 and by a further growth of 2.4% in 2022. In 2020, Saskatchewan’s economy went through a 5.2% contraction, affected by low commodity prices and COVID-related shutdowns.


Canada’s strong Economic Recovery forecast creates opportunities for Employers, Businesses, Job-Seekers and International Students


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