The Bank of Canada upgraded forecasts compared to January
The new Bank of Canada forecasts highlight just how much the global economy has improved this year in spite of new waves of the pandemic. The previous forecasts from December were torn up and replaced with much stronger estimates. Some of that is given back in 2022 but the overall picture is much better, in part due to higher government spending.
For Canada, they now see 6.5% GDP growth this year, up from 4.0% previously. That's stronger than the 5.9% consensus. For 2022, it's 3.7% from 4.8% as growth is pulled forward. But 2023 is stronger at 3.2% from 2.5%. Overall, the trajectory is much higher.
Globally, the largest change is the US, where they now forecast 7.0% GDP growth in 2021 compared to 5.0% in January. That's well-above the +6.2% consensus. Even with that, they also see growth at 4.1% in 2022, which is also above the 4.0% consensus and 3.9% prior estimate. Estimates for 2023 are lower but that's deep into the future and the overall picture is higher growth sooner.
As for the rest of the world, there's a solid upgrade for China and the 'rest of the world'. Overall, the world GDP forecast is materially higher.
What's also notable is that Canadian CPI is now forecast to rise 2.3% in 2023. That will mean a hike is coming in 2022.
