Economic Outlook: What s ahead in 2018?

Transcription

1 Economic Outlook: What s ahead in 2018? Pierre Cléroux, Vice President Research and Chief Economist, BDC Shelburne April 18 th, 2018

2 Agenda World economic outlook Ontario economic outlook What to watch for in

3 01. World economic outlook 3

4 Synchronized world growth Real GDP global growth (%) e 2018f Note: GDP 2010 constant prices, e = estimate; f = forecast SOURCE: International Monetary Fund, World Economic Outlook Update, January 2018.

5 Oil prices are recovering Price of West Texas Intermediate, US$ per barrel US$105 US$26 US$62 June 2014 February 2016 February 2018 SOURCE: U.S. Energy Information Administration

6 Broad-based economic upswing Real GDP growth(%) 2018f Europe China India NOTE: GDP 2010 constant prices, forecast. Europe here referred to Euro Area. SOURCE: International Monetary Funds, January 19 th 2018.

7 Economic momentum south of the border 7

8 Real GDP Growth the U.S. economy is on a roll e 2018f Note: e = estimate; f = forecast SOURCE: U.S. Bureau of Economic Analysis & Consensus Forecasts, March

9 Unemployment rate remains at historic low % % Mar-08 Mar-10 Mar-12 Mar-14 Mar-16 Mar-18 Mar-10 Mar-18 SOURCE: U.S. Bureau of Labor Statistics 9

10 U.S. labour market is getting tighter Wage growth (%) 4.00% 3.50% 3.00% 2.7 % 2.50% 2.00% 1.9 % 1.50% 1.00% 0.50% Mar-08 Mar-10 Mar-11 Mar-12 Mar-14 Mar-16 Mar-18 Mar-18 Note: 3-month moving average of hourly earnings SOURCE: U.S. Bureau of Labor Statistics 10

11 Low interest rates and inflation have supported U.S. growth Annual change and yield, % Personal consumption expenditures index Treasury bond yields (2 year constant maturity) -2 Feb-82 Feb-86 Feb-90 Feb-94 Feb-98 Feb-02 Feb-06 Feb-10 Feb-14 Feb-18 SOURCE: U.S. Bureau of Economic Analysis & Board of Governors of the Federal Reserve System (US) 11

12 02. Ontario economic outlook 12

13 Real GDP Growth solid economic growth in 2018 for Canada f SOURCE: Statistics Canada (historical data), Consensus Forecasts March,

14 Ontario just off the podium for the coming year Forecasted GDP growth by province in 2018 Bristish- Columbia 2.5 % Alberta 2.4 % Sask. 2.1 % Manitoba 2.0 % Ontario 2.1 % Quebec 2.2 % New Brunswick 1.0 % Newfoundland and Labrador 0.1 % P.E.I. 1.6 % Nova Scotia 1.0 % SOURCE: Average of Chartered Banks, April 3 rd 2018

15 Ontario s economy is expected to continue to grow at a solid pace Annual change, % f e 2018f e=estimate, f= Forecast, average of chartered banks forecast. SOURCE: Ontario Ministry of Finance (historical data), BDC calculations 15

16 Exports volume Real value, $ 400, , , , , , ,000 50, * * *= year to date as available Q1 to Q3 of 2017 compared to same period in NOTE: Exports cited include both, goods and services. SOURCE: Ontario Ministry of Finance, BDC calculations 16

17 Business investment growth is positive Annualized quarterly change, % % Q Q Q Q Q Q Q NOTE: Non-residential structures, machinery and equipment, and intellectual property products. SOURCE: Ontario Ministry of Finance, BDC calculations 17

18 Government expenditures and investments are up Annual change, % % * *= year to date as available Q1 to Q3 of 2017 compared to same period in NOTE : Government spending and gross fixed capital formation. SOURCE: Ontario Ministry of Finance, BDC calculations 18

19 Household consumption continues to drive growth Annual change, % % * *= year to date as available Q1 to Q3 of 2017 compared to same period in NOTE : Household consumption expenditure SOURCE: Ontario Ministry of Finance, BDC calculations 19

20 Residential Market Forecast Sales activity are expected to cool in 2018 for Ontario % -9.6% -12.0% SOURCE: CREA, Quarterly Forecasts, March 15,

21 Total value of building permits is up Value in thousands, $ 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, , NOTE: In thousands of dollars seasonally adjusted at annual rate, total of residential and non-residential SOURCE: Statistics Canada 21

22 Housing starts Thousands of units f f NOTE: In thousands of units, seasonally adjusted at annual rate, f=march,2018 SOURCE: Statistics Canada & CMHC 22

23 Total employment in Ontario In thousands of people 7, , , , , , ,700.0 Mar-15 Jul-15 Nov-15 Mar-16 Jul-16 Nov-16 Mar-17 Jul-17 Nov-17 Mar-18 SOURCE: Statistics Canada 23

24 Unemployment rate remains low % * * End of year rate (December), *latest data available (March) SOURCE: Statistics Canada

25 Ontario s economy is expected to continue to grow at a solid pace Annual change, % f e 2018f e=estimate, f= Forecast, average of chartered banks forecast. SOURCE: Ontario Ministry of Finance (historical data), BDC calculations 25

26 03. What to watch for in

27 4 things to keep on your radar in 2018 Rising interest rates NAFTA Technology Aging population

28 Rising interest rates 28

29 Canadian and U.S. key rates: growing differential 2.25 % 1.50 % 1.75 % 1.25 % 1.50 % 1.00 % 29

30 Where is the loonie headed? Interest rate Canada vs USA Oil prices NAFTA 30

31 End of NAFTA? 31

32 U.S. merchandise trade balance in 2017, by country US$ in billions China Canada China Japan Germany Mexico Ireland Vietnam Italy Canada SOURCE: U.S. Census Bureau. 32

33 Canada is the largest or second-largest export market for 42 U.S. states Largest or second largest SOURCE: U.S. Census Bureau.

34 U.S. import tariffs have fallen since creation of WTO Canada s weighted average: 3.8 % 2.2 % SOURCE: World Integrated Trade Solution

35 Technology 35

36 Rate of change Moore s Law & the adoption rate of innovation Technology Today SOURCE: Rewriting the rules for the digital age, Deloitte Global Human Capital Trends

37 Rate of change Moore s Law & the adoption rate of innovation Technology Individuals Today SOURCE: Rewriting the rules for the digital age, Deloitte Global Human Capital Trends

38 Rate of change Moore s Law & the adoption rate of innovation Technology Individuals Businesses Today SOURCE: Rewriting the rules for the digital age, Deloitte Global Human Capital Trends

39 E-commerce retail sales are booming in Canada Retail e-commerce sales $25 billion 2014 $56 billion 2020 (f) SOURCE: and BDC calculations.

40 Automation will reshape the economy Worldwide sales of industrial robots will increase XBy 2019 SOURCE: World Robotics,

41 Lagging behind 51 % ICT investment per worker in Canada as proportion of the U.S.

42 The changing face of the labour market 42

43 Share of the population aged 65 years-old and over in Ontario 12% 17% 23% f SOURCE: Statistics Canada

44 Growth of Ontario s working age population will be near zero in % 2.0% 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0 % 0.2% 0.0% Historic Forecast SOURCE : Statistics Canada 44

45 80% of population growth will come from international immigration in 2032

46 Millennials are dominating the workplace Millennials and Generation Z will account for 71 % of the workforce by 2030 SOURCE: Statistics Canada (forecast) 46

47 tech savvy connected educated purpose 47

48 Profit from low interest rates and a growing economy Reassess your export market dynamism Take advantage of new technologies to boost your productivity Innovate with new human resources models

49 Questions?

50 Thank you. BDC BDC_ca BDC Pierre Cléroux, Vice President Research and Chief Economist, bdc.ca INFO-BDC