Canadian GDP growth to hit 2.6% in 2014, RBC predicts
Revival of U.S. economy will lead to stronger export growth
RBC Economics says that after another year of mediocre growth, Canada's economy is expected to perk up in 2014 thanks to strong growth in the United States.
The bank's latest economic outlook is forecasting real GDP growth in Canada of 1.7 per cent in 2013, 2.6 per cent in 2014 and 2.7 per cent in 2015, supported by a pick-up in exports and strengthening business investment.
That's a more bullish prediction than the Bank of Canada, which says Canada's 2014 GDP growth will be 2.3 per cent, on top of 1.6 per cent this year.
RBC chief economist Craig Wright says a slow and subpar recovery in the U.S. "has no doubt played a part in the underperformance of Canadian exports through 2013."
But Wright says looking ahead to 2014, RBC expects stronger growth south of the border will translate to increased demand for Canadian exports, especially as the expansion fans out and business investment accelerates.
He says this expected uptick in both exports and business investment is a critical component of the outlook for Canada's economy.
The settlement reached yesterday over the U.S. budget circumvents the risk of another federal shutdown that would stall the economy.
And figures from the Fed's beige book, a collection of economic numbers, shows U.S. manufacturing is on the upswing, which will lead to an improved employment outlook.
David Rosenberg, chief economist and strategist with Gluskin Sheff & Associates Inc., is extremely bullish on the U.S. economy, saying growth may hit three per cent next year. He expects a resurgent U.S. consumer, as well as higher wages kick in.
The RBC report adds that extra support to external trade will come from a weakening Canadian dollar over the course of next year. The softer currency reflects a levelling off in commodity prices alongside a generally firmer tone for the U.S. dollar.
with files from CBC News