The Canadian economy is poised for a comeback, according to a report from BMO Economics and BMO Business Banking.
"The economy is expected to grow a solid 6.0 per cent this year, with most of the strength coming in the second half," said Doug Porter, Chief Economist, BMO Financial Group. "Monetary policy remains highly accommodative, fiscal support is still flowing, while pent-up demand for services, entertainment and travel will provide a boost from households with plenty of savings. That momentum should carry into 2022, when growth is expected to run at a still-strong 4.5 per cent."
Mike Bonner, Head, Canadian Business Banking, BMO Bank of Montreal, stated that the past 17 months have been characterized by uncertainty for main street businesses across the country, however now there is “a period of opportunity. And, to seize it, it's no longer about simply opening up but about reinventing how to engage consumers and by accelerating digital efforts."
The report also includes provincial forecasts. Among the highlights, Alberta is expected to lead the country in 2021 with a 7.2 per cent rebound in real GDP due to a bounce back in oil production.
The report notes that Ontario's economy entered the pandemic with the strongest growth trends in more than 15 years. “But, with the largest urban centre and longer-lasting restrictions, the growth rebound was somewhat slower to take shape this year. That will leave growth slightly below the national average at 5.5 per cent for all of 2021.”
Quebec is expected to outperform slightly with 6.2 per cent growth this year, says the report, underlining that government relief programs “have helped provide liquidity for some businesses and let them go on the offensive and position themselves better for re-opening.”
Meanwhile, Atlantic Canada’s bubble approach has been a success from a health care perspective, notes the report, but has hurt economic activity in sectors such as travel and tourism. “With the U.S. border opening in early August, some of the 2021 tourism season will be salvaged, but we expect a more complete recovery in 2022. Businesses are looking to tap into buy local sentiment and capture spend from pent-up consumers, which will help spur growth.”