Conference Board sees modest economic growth in 2017

The national economy should see a slight pick-up this year, the Conference Board of Canada said in a new report out Thursday, with growth expected to climb to 1.9 per cent.

Alberta expected to lead all provinces in economic growth this year

Retail sales activity is expected to cool this year and next, the Conference Board of Canada says. (Chris Wattie/Reuters)

The national economy should see a slight pick-up this year, the Conference Board of Canada said in a new report out Thursday.

The independent research group said it sees overall growth of 1.9 per cent this year, up from the 1.3 per cent it expects will be reported for last year. 

"The plunge in energy investment is expected to slow and we should finally see a resurgence in non-energy investment," the Conference Board said.

"Canadian exports are also expected to fare a little better as the U.S. economy picks up speed and the Canadian dollar remains weak," the group said, but added that exports levels will still remain low by historical standards.

Federal stimulus spending is expected to give a boost to national economic growth, although provincial belt-tightening is forecast to offset some of that.

Looking ahead to 2018, "dismal" business investment levels and slowing labour force growth mean it is unlikely there will be any acceleration in GDP growth, they said.

Retail sector seen cooling

The group said that consumer spending has been a "bright spot" in the economy, seeing increases in recent years despite weak job growth in some provinces and  soft wage gain.

"However, the ability to sustain these increases will be limited by the run-up in household debt over the last several years," they said.

The Conference Board sees retail sales growth cooling from 3.8 per cent in 2016 to 2.9 per cent this year and down to 1.9 per cent in 2018.

The soft economic growth expected for this year and next mean the Bank of Canada is expected to hold off boosting interest rates until 2018.

"And even when rates do start to rise again, we expect only modest increases as the economy closes in on full potential. With Canadian rate increases lagging well behind those in the U.S., the loonie will lose ground against the greenback this year. 

Alberta on top

On a province-by-province basis, Alberta is expected to lead the country in economic growth this year.

"Following two tough years stemming from widespread weakness in the energy sector, Alberta's economy finds itself with the strongest economic growth this year," said Marie-Christine Bernard, of the Conference Board of Canada. "Along with a big increase in oil production, some of the growth in Alberta will come from the rebuilding efforts in Fort McMurray."

"However, we expect more subdued economic growth next year as oil prices are not expected to increase very much," Bernard said in a statement. "Beyond Alberta, all provinces are forecast to see positive economic growth in 2017, with the exception of Newfoundland and Labrador."