OTTAWA (Reuters) – Canada will adjust to lower commodity prices in three phases over the next five years, with the impact of lower incomes to be felt more strongly later on and economic growth by 2020
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Canada will adjust to lower commodity prices in three phases over the next five years, with the impact of lower incomes to be felt more strongly later on and economic growth by 2020 being 2 percent lower than it otherwise would have been, according to staff at the Bank of Canada.
Restructuring in the resource sector is the dominant factor in the first phase as collapsing profits prompt firms to curtail business investment and employment, a staff analytical note said.
That restructuring phase should peak in the middle of this year, then stay roughly constant. The impact of lower incomes will start to hurt domestic consumption, while the lower Canadian dollar will boost non-commodity exports.
