Canada faces dim growth prospects in 2016

Subject

Canada's economic outlook.

Significance

Rising US interest rates, falling oil prices, a weakening housing market and rising levels of household debt to income are creating a climate of uncertainty and pessimism about the future of the Canadian economy. Canada -- like many other commodity exporters -- is struggling to adjust to the collapse in the international prices of oil, minerals and timber, on which much of the country's economic performance relies.

Impacts

• Investment in new oil sands projects or exploration is likely to dwindle, as investors grow more risk-averse.
• Trudeau is unlikely to face a referendum on his economic stewardship until the competitive provincial elections in 2018.
• The temporary positive effect of a weakened Canadian dollar will not reverse the decade-long decline in the manufacturing sector.