The Canadian economy is poised for modest recovery this year, with economic growth expected to reach 1.5 percent according to a newly released Conference Board of Canada report. This forecast comes as welcome news to investors and businesses navigating the aftermath of recent economic headwinds.
“We’re seeing encouraging signs of resilience in several sectors,” says Michael Burt, Executive Director at the Conference Board. “While 1.5 percent isn’t breaking any records, it represents stability following a period of significant uncertainty in both domestic and international markets.”
The projected growth stems from several key factors converging in Canada’s favor. Service industries continue to outperform expectations, adding approximately 27,000 jobs in the second quarter alone. Meanwhile, cooling inflation—now hovering near the Bank of Canada’s 2 percent target—has bolstered consumer confidence and spending power.
Resource extraction and manufacturing sectors present a mixed picture. Oil and gas operations in Alberta and Saskatchewan are experiencing cautious expansion with production volumes up 3.2 percent year-over-year. However, manufacturing in Ontario and Quebec continues to face challenges from labor shortages and international competition.
Housing remains a critical economic driver despite affordability concerns. New construction starts increased 8.4 percent nationwide in Q2, with particularly strong performance in mid-sized urban centers where demand continues to outpace supply.
“The housing market dynamics are complex,” notes TD Bank economist Rishi Sondhi. “While high interest rates have tempered demand in some segments, population growth continues to create fundamental housing needs that support construction activity and related industries.”
Export performance will likely play a decisive role in whether Canada reaches or exceeds the 1.5 percent projection. The United States remains Canada’s largest trading partner, accounting for over 75 percent of all exports. The health of the American economy therefore continues to significantly impact Canadian growth prospects.
The forecast isn’t without risks. Global trade tensions, particularly between major economies like the United States and China, could disrupt supply chains and dampen demand for Canadian exports. Domestically, high household debt levels remain a vulnerability should interest rates rise unexpectedly.
Policy decisions will also shape economic outcomes throughout 2024. The Bank of Canada’s approach to monetary policy, including potential interest rate adjustments, will influence borrowing costs for businesses and consumers alike. Meanwhile, federal and provincial fiscal policies aimed at addressing infrastructure needs and housing affordability could provide additional economic stimulus.
For ordinary Canadians, the 1.5 percent growth projection suggests modest improvements in employment opportunities and income stability, though significant cost-of-living challenges persist in many regions.
As we move through 2024, will this moderate growth projection translate into meaningful improvements for Canadian households, or will external pressures continue to constrain the country’s economic potential? The coming quarters will reveal whether Canada’s economy can build momentum beyond these cautious projections.
