- Alberta economy expected to
slow in 2019: RBC Economics forecasts the pace of growth to
slow to 1.5 per cent in 2019 from 2.4 per cent in 2018.
- Canada's economy to face
challenges: Canada's GDP
growth expected to drop 0.2 percentage points to 1.7 per cent in
2019.
- Global expansion to continue, but downside risks are
growing: Global economy forecasted to expand by 3.7 per cent,
matching the previous two years.
TORONTO, Dec. 12, 2018 /CNW/ - Two of Canada's western provinces are expected to
take diverging paths in 2019, according to the latest RBC Economic
Outlook Report.
Oil production cuts in response to pipeline constraints and
volatile oil and gas revenues will contribute to a slow-down in
growth for Alberta next year. RBC
projects Alberta's growth to
decline to 1.5 per cent in 2019, from 2.4 per cent this year.
"The oil production cut could lower GDP growth in Alberta by as much as a percentage point
relative to prior assumptions," said Craig Wright, Senior
Vice-President and Chief Economist, RBC. "However, the impact will
depend on how prices and inventories respond to the cuts."
Meanwhile, British Columbia's
economy is expected to thrive in 2019. LNG Canada's $40 billion natural gas project will provide a
significant boost to the province's economy. RBC Economics
forecasts 2.6 per cent growth in 2019, jumping from 1.9 per cent in
the previous outlook. The higher pace of growth is likely to
continue into 2020.
"Given that LNG Canada has indicated that it will spend
$18 billion in Canada in the first five-year phase, mostly in
B.C, we expect this activity will provide a shot in the arm to the
provincial economy," said Wright. "However, this also has the
potential to cause further strain on a tight labour market."
With record-low unemployment levels in B.C, there isn't much
local labour remaining. The shortages could put upward pressure on
wages and businesses will likely look to international and
interprovincial immigration to fill the gap.
Canada to face challenges in
2019
Slumping oil prices and higher interest rates weighed
heavily on Canada's economy in the
latter part of 2018 and should have a similar effect into next
year. Regulatory changes and rising rates will weigh on household
spending 2019. While modest increases in investment, outside the
energy sector, and exports will be accompanied by another year of
government spending. RBC Economics forecasts Canada's GDP growth to decrease by 0.2
percentage points to 1.7 per cent in 2019.
Outside of Canada
Global expansion to continue, but downside risks are
growing
The global economy is expected to face significant
headwinds in 2019. With the era of ultra-low interest rates having
seemingly come to an end, along with an unsettled political
backdrop, the momentum has shifted downward. RBC Economics
forecasts the global economy to expand by 3.7 per cent in 2019,
matching the pace of the previous two years.
US economy continues to carry substantial
momentum
Stronger consumer spending and a rebound in
investment that was aided by tax cuts gave the US a significant
lift over the other G-7 countries in 2018. RBC Economics expects
the US economy to expand at an above-potential pace again in 2019.
However, tighter financial conditions will likely cool consumer
spending and business investment in the coming year.
After tariffs were placed on Chinese goods, as well as steel and
aluminum from several countries, it is expected that growth of both
exports and imports will slow in 2019. The strong US dollar will
also weigh heavily on demand for US exports. And while costs
associated with these tariffs will be initially absorbed by
businesses, they will likely filter into consumer prices the longer
they remain in place.
A complete copy of the RBC Economic and Financial Market
Outlook is now available. A separate RBC Economics Provincial
Outlook assesses the provinces according to economic and
employment growth, unemployment rates, retail sales, housing starts
and consumer price indices.
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SOURCE RBC