We could be looking at another rate cut from the Bank of Canada by mid-year, said Douglas Porter, chief economist of BMO Financial Group.
Along with the other Big Five economists, he spoke at the Economic Club’s 2016 outlook breakfast on January 5.
While domestic growth was buoyed by stronger-than-expected housing markets and solid consumer spending in 2015, he explained, business investment has remained weak and we will likely only see 0.5% growth in exports.
He also predicted that the loonie will bottom out in the spring at just below US$0.70, before rebounding to US$0.73 by the end of 2016.
Avery Shenfeld, chief economist at CIBC World Markets, added that we will not see the loonie go higher than US$0.75 in 2016-2017, even if oil improves. That’s because $60/barrel oil is “optimistic,” said Warren Jestin, chief economist at Scotiabank.
He said that $60-oil can reinvigorate some American shale gas operations, but that it will not reinvigorate the oil sands, which break even between $60/barrel and $80/barrel.
Beata Caranci, chief economist of TD Bank Group, said those dynamics mean Canadian growth will stay below 2%, even in 2017. Her 1.5% to 1.7% growth forecast for 2016/2017 includes 0.3% growth from fiscal stimulus.
The article was originally published on Benefits Canada‘s companion site, Advisor.ca.
For more on Canada, the U.S. and global growth, see the live tweets from yesterday’s event.