2016-2020_Financial_Plan_Web

Economic Overview

Source: Bank of Canada

CANADA

Canada’s GDP for 2016 is forecasted at 1.7% while the unemployment rate is expected to remain around 7%. Depressed commodity prices continue to be the major factor producing drag on the economy and causing large losses for the Canadian dollar. Consumer spending will be restrained as the pace of inflation for food items outpaces any potential savings at the pump through reduced gasoline prices. The food inflation rate is expected to increase between 2 and 4 percent during 2016. Since 81% of all fruits and vegetables consumed in Canada are imported, they are especially susceptible to currency fluctuations. They are forecasted to increase in price by around 4.5% this year. Estimates indicate that Canadian households will spend an additional $345 on food in 2016. The Canadian dollar suffered significant losses against the US dollar last year to become the worst performer out of all major currencies. The currency has lost approximately a third of its value since the start of 2014. At the beginning of January, the Loonie dipped below 69 cents US for the first time since April 2003. The Loonie is expected to fluctuate between 70 and 75 cents US during 2016. It remains to be seen if these estimates will hold true as the plunging price of oil, global stock market volatility, and the prospect of US interest rate hikes have the potential to pose additional headwinds for the Canadian dollar.

2016-2020 FINANCIAL PLAN

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