Business Monitor International

Canada Business Forecast Report

Published 29 January 2014

  • 33 pages
  • Instant access to your report online and PDF format through your account library
  • Includes 3 free updated quarterly reports
Canada Business Forecast Report

Core Views

  • Economic growth in Canada will gradually accelerate over the next few years, helped by a continued expansion in private consumption and a return to positive growth in fixed investment. Our growth outlook, however, remains below consensus expectations, our reflecting concerns about high household leverage, declining commodity prices, and recent weakness in US economic data .

  • Exchange rate depreciation and stronger US demand will see Canada's trade in goods balance move from deficit into surplus by 2016, which will continue to narrow the current account deficit over the coming years. Despite recent depreciation, we believe that the Canadian dollar remains fundamentally overvalued, and continued weakness in 2014 will help to revive manufactured goods exports to a strengthening US economy.

  • Monetary policy will remain unchanged in Canada until 2015, when the Bank of Canada will commence a gradual tightening cycle, as exchange rate weakness and rising industrial capacity utilisation see inflation move towards the central bank's 2% target. In the near term, however, an interest rate cut is not out of the question should economic data show renewed weakness.

Key Forecast Changes

  • We have not made any major forecast changes this quarter.

Key Risks To Outlook

  • Downside Risks To Growth Forecast: Exogenous factors, such as declining commodity prices and an erratic economic recovery in the US, could have more profound effects on our real GDP growth projections in the near term. However, we feel that our below-consensus forecasts currently reflect our more cautious outlook in this respect.

  • Downside Risks To Long-Term Forecast: High household leverage and elevated housing prices pose the biggest downside risk to Canada's economy. Canadian households have not deleveraged over the past five years, in which US household debt-to-GDP fell from a peak of 95.5% in Q109 to 76.7% in Q413. Canadian household debt-to-GDP, meanwhile, continued to climb...

Table of Contents

Executive Summary
Core Views
Major Forecast Changes
Key Risks To Outlook
Chapter 1: Political Outlook
SWOT Analysis
BMI Political Risk Ratings
Domestic Politics
Key Questions For 2014
TABLE: Domestic Politics
Long-Term Political Outlook
Strong Foundation, But Some Challenges From Within
Chapter 2: Economic Outlook
SWOT Analysis
BMI Economic Risk Ratings
Economic Activity
Growth Set To Disappoint In 2014
Exchange Rate Policy
CAD: Rate Cut Risks Rising
TABLE: BMI Canada Currency Forecast
Chapter 3: 10-Year Forecast
The Canadian Economy To 2023
Structural Factors To Constrain Growth
TABLE: Long-Term Macroeconomic Forecasts
Chapter 4: Key Sectors
TABLE: Autos Sector : Historical Data And Forecasts , 2010-2017
Food & Drink
TABLE: Food Consu mption Indicators - Historical Data & Forecasts , 2012-2017
TABLE: Alcoholic Drin k Value /Volu me Sales - Historical Data & Forecasts , 2012-2017
TABLE: Mass Grocery Retail Sales By For mat - Historical Data & Forecasts , 2012-2017
Business Monitor International Ltd www
com 3
Other Key Sectors
table : Oil and Gas Sector Key Indicators
table : Teleco ms Sector Key Indicators
table : Infrastructure Sector Key Indicators
table : Phar ma Sector Key Indicators
table : Freight Key Indicators
Chapter 5: BMI Global Assumptions
Global Outlook
Momentum To Continue In H114
Table: Global Assumptions
Table : Developed States , Real GDP Growt H, %
Table : Emerging Mar kets , Real GDP Growth , %

The Canada Business Forecast Report helps businesses with market assessment, strategic planning and decision making to promote growth and profitability in Canada and is an essential tool for CEOs, Chairmen, Finance Directors/CFOs, Managing Directors, Marketing/Sales Directors with commercial interests in this emerging market..

An influential new analysis of Canada's economic, political and financial prospects through end-2017, just published by award-winning forecasters, Business Monitor International (BMI).

Key Uses

  • Forecast the pace and stability of Canada's economic and industry growth through end-2017.
  • Identify and evaluate adverse political and economic trends, to facilitate risk mitigation.
  • Assess the critical shortcomings of the business environment that pose hidden barriers and costs to corporate profitability.
  • Contextualise Canada's country risks against regional peers using BMI's country comparative Risk Ratings system.
  • Evaluate external threats to doing business in Canada, including currency volatility, the commodity price boom and protectionist policies.

The Canada Business Forecast Report by Business Monitor International (BMI) includes four major sections: Economic Outlook, Political Outlook, Business Environment and Key Sector Outlook.

Economic Outlook:

How will the Canada economic policy-making and performance impact on corporate profitability over 2013-2017?

BMI provides our fully independent 5-year forecasts for Canada through end-2017 for more than 50 economic and key industry indicators. We evaluate growth, and also forecast the impact of economic management.

Economic Outlook Contents

The Canada Business Forecast Report features BMI's forecasts with supporting analysis for 2013 through to end-2017, set against government views and BMI's evaluation of global and regional prospects.

Key Areas Covered:


  • Full 10-year forecasts with data - for key macroeconomic variables including GDP (real growth and per capita), population, inflation, current account balance and the exchange rate.
  • BMI's comprehensive Risk Ratings system - rates each country worldwide for economic and political risk, and rates the business environment, within a global and regional context.

Written Analysis:

  • Economic Activity - real GDP growth, employment, inflation, consumption (retail sales and confidence).
  • Balance of Payments - trade and investment, current and capital account.
  • Monetary Policy - interest rate trends (bank lending and deposit rates) and inflation (producer price and consumer price).
  • Exchange Rate Policy - currency controls, foreign investment flows, exchange rates and foreign exchange reserves.
  • Fiscal Policy - macroeconomic strategy and policies, government finance and tax reforms.
  • Foreign Direct Investment - approvals, inflows and climate.
  • External Debt - debt profile (short and long-term plus public and private sector exposure).
  • Global Assumptions - forecasts for each year to end-2017 covering: major commodities, growth in key regions, inflation, and interest and exchange rates, in the United States, Japan, China and the eurozone.

Key Benefits

  • Rely upon BMI's 100% independent forecast scenarios for Canada and underlying assumptions - we take no advertising and are privately-owned.
  • Exploit the benefits of BMI's comprehensive and reliable macroeconomic database on Canada, sourced and fully maintained by BMI from an extensive network of private sector, government and multilateral contacts.
  • Gain key insights into the current and future direction of government economic policy, which could significantly affect your company's business prospects, from BMI's team of analysts and economists.

Political Outlook:

What are the political risks to doing business in Canada over the next 5-years?

BMI's Canada country Risk Ratings evaluate the short- and medium-term threats to political stability.

Political Outlook Contents

  • SWOT Analysis for the Canada Market - Political Strengths, Weaknesses, Opportunities and Threats facing Canada.
  • Political Stability and Risk Assessment - BMI's Risk Ratings assess explicit short- and long-term risks to political stability; latest ratings, rankings and trends for Canada's risk are compared with regional and global averages.
  • Current Administration and Policy-making BMI assesses the threats to the continuity of economic policy, and likely changes to the business operating environment.

Key Benefits

  • Benchmark Canada's risk profile against its neighbours, the global and regional average, allowing easy comparison of risks between key business markets.
  • Identify, evaluate and anticipate political and security risks to the business environment, and to your company's current operations and future plans.
  • Gain valuable insights into government and policy-making, through BMI's specialist team of analysts and economists, and their network of private and public sector sources.

Business Environment

Business Environment Risk Ratings with SWOT Analysis - Business environment Risk Ratings for Canada, benchmarked against ratings for regional neighbours.

Country Competitiveness - Competitiveness of Canada's business operating environment in supporting corporate growth and profitability, compared with regional neighbours.

Business Environment Contents

  • Domestic Environment - Transparency, cronyism and corruption; labour market flexibility; corporate tax burden; interest rate levels; sophistication of banking sector and stock market; levels of business confidence; infrastructure and IT.
  • Foreign Direct Investment - Analysis of foreign investment regime; foreign ownership laws; attractiveness of business environment to foreign investors.
  • Foreign Trade - Analysis of trading environment, government trade policy, liberalisation measures, tariffs and membership of trade areas.

Key Benefits

  • Assess your company's evolving exposure to country specific operational and business risks, using BMI's in-depth analysis of the legal and regulatory business environment.
  • Understand your market's comparative strengths and weaknesses in the key areas of commercial infrastructure and business institutions, using BMI's proprietary global Business Environment Risk Ratings.

Key Sector Outlook

Which industry sectors in Canada will grow fastest, and where are the major investment opportunities in the market?

BMI's identifies investment opportunities in Canada's high growth industries including automotives, defence & security, food & drink, freight transport, infrastructure, oil & gas, pharmaceuticals & healthcare and telecommunications & IT.

Key Areas Covered:

  • Market Overview - Size and value of each industry with developments over 2008-2012, covering major industry key performance indicators (KPIs) that have impacted company performance.
  • 5-year Industry Forecasts - Forecasts for each year over 2013-2017, using BMI's proprietary industry modeling technique, which incorporates all key domestic and international indicators - including economic growth, interest rates, exchange rate outlook, commodity prices and demographic trends - to provide fully integrated forecasts across, and within, each industry.
  • Demand- and Supply-Side Data/Forecasts - BMI's industry data covers both the output of each industry and the domestic demand, offering clear analysis of anticipated import/export trends, as well as capacity growth within each industry.

Key Benefits

  • Target strategic opportunities in high growth industries, which are benefiting from global mega trends, and thus offer strong investment and growth opportunities.
  • Compare the growth path of different industries to identify which are best placed to benefit from domestic and international economic prospects, and which have historically suffered from volatile growth trends - a key indicator of future risks.

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The sections that I find most interesting and useful are the macroeconomic data and forecasts for the country, top export destinations and economic activity. The indicators/analysis of these areas helps us orient our thinking, our assumptions and, consequently, our decisions in the commercial area.

Country Manager, DHL Express