The Globe and Mail reports in its Thursday, Jan. 10, edition that the Bank of Canada has long predicted that the Canadian economy would rotate away from the consumer sector as its growth leader. The Globe's David Parkinson writes that it looks like in 2019, it will not have much choice -- the consumer is about to step aside, whether the new leadership is ready or not.
The BOC's quarterly economic update, released Wednesday, shows a sharp deterioration in the growth outlook for 2019. Many of the key factors involved place this slowdown in the lap of the consumer.
The most glaring figure in the BOC's new projections is its forecast for growth of gross domestic income this year: 0.9 per cent, less than half of 2018's estimated growth. The major source for this slowdown, as the BOC said in its quarterly Monetary Policy Report, is the sharp drop in global oil prices in recent months, which has hit Canada's oil sector particularly hard. That income slowdown will inevitably include households.
The BOC noted that household consumption and housing investment "have been weaker than expected" anyway, as Canadians struggle to adjust to the impact of tougher regulations weighing on the housing market.
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