BOC Confident In Its Economic Outlook

27 jul. 2021 5 Consumo de tiempo Read

BOC Confident In Its Economic Outlook


  • Employment rebounded in June 2021 by 230,700 jobs following two consecutive months of declines. The unemployment rate also fell to 7.8%.
  • Retail sales declined by 2.1% in May 2021 amid the third wave of infections in Canada.
  • Wholesale trade rose for the third consecutive month to $72.2 billion in May 2021.



Global financial markets are proving to be highly sensitive to developing risks to the nascent economic recovery. After weeks of relative calm, the financial markets reacted strongly to growing concerns regarding the delta variant, rising geopolitical tensions and worries that the economic recovery might have already prematurely reached peak growth rates. As investors fluctuated between safe-haven assets and piling back into reflation trades, the Bank of Canada appears to be increasingly confident in its positive outlook for the Canadian economy. With strong vaccination rates and the easing of health restrictions, the central bank felt confident enough to further pare down its quantitative easing program this month by $1 billion to target $2 billion per week. While it lowered its 2021 GDP growth forecast by 0.5% to 6.0% due to the recent lockdowns, it also lifted its 2022 outlook from 3.7% to 4.6%.

The Canadian economy is expected to see a strong pickup in activity during the second half of 2021, fueled by pent-up demand and the return to more normal household spending levels as the economy reopens. Even though the Bank of Canada also raised its inflation expectations over the short term, the central bank reaffirmed that it does not expect to raise interest rates until the latter half of 2022. Going forward, any further tapering of its quantitative easing program will be dependent on the “strength and durability” of the recovery.

In the commercial real estate world, investor interest has bounced back to its highest point since the beginning of the pandemic. Debt liquidity remains high for the industrial and multifamily sectors that have that have benefited from spread compression while lenders are acknowledging the return to an ‘office centric’ hybrid work format. In fact, the major Canadian lenders themselves are planning for a staged re-entry into the workplace in the fall, with a focus on flexible working arrangements. Further bolstering the office market will be Canada’s status as a leading destination for employers seeking tech talent. According to CBRE’s 2021 Scoring Tech Talent report, eight Canadian cities are featured on the list of North America’s Top 50 Tech Talent markets led by Toronto ranking at the #4 spot.



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