Skip to main content

Beginning of Main Content


CPA Ontario is proud to sponsor Economic Outlook 2019. Chief Economists from Canada’s largest financial institutions share their predictions for 2019. The views expressed are not the views of CPA Ontario but solely those of the speakers. For a glimpse of what may be on the horizon, watch the live stream.


A summary of the predictions from this year's Economic Outlook


Senior Vice-President and Chief Economist for Scotiabank

Q: What will drive activity in Canada from a global perspective?

“There’s a sharp contrast, at least from our perspective, between what we think markets are seeing and worrying about relative to what we think is likely to happen.”

  • 2018 was thought to be the year of peak growth, so slowing growth in 2019 is anticipated. Will the slowing be gradual — at 0.1 or 0.2 of global growth — or is it going to be more substantial?
  • China’s growth is slowing to around 6% this year. This is roughly in line with what the Chinese authorities are trying to achieve. It’s the reflection of a longstanding structural adjustment program to transform the economy, and that comes with certain economic cost.
  • Because London is a major financial centre, Brexit is also a global concern. The uncertainty surrounding Brexit makes predictions about its implications difficult.
  • Europe’s growth is also slowing, but at a rate that is in line with this stage of the economic cycle.
  • For Canada, growth in the global environment is weaker than anticipated, but not dramatically so. There are, however, extremely large risks, such as the U.S.-China trade war.
  • The trade war between the U.S. and China is the single biggest risk facing the global economy. This conflict should resolve itself, and Canada should expect to see 2% economic growth. If the trade war intensifies, however, then forecasts will need to be readjusted.


Chief Economist for Royal Bank of Canada

Q: In terms of the U.S., there is talk of recession. Do the data points support it?

“It’s not surprising that the recession debate has surfaced. The U.S. economy is in its tenth year of expansion … The closer you get to the end of expansion the odds of recession start to move higher.”

  • Data from financial markets indicates that either a recession is underway, or we’re close to it. If we see an inverted yield curve for an extended period, then the odds of recession rise.
  • Equity markets took a hard turn in the final quarter of last year, and with uncertainty from risks such as Brexit and the U.S.-China trade war, we’ll continue to see sluggishness in that market.
  • Last year, growth numbers in the U.S. were good, coming in just under 3%. This year, U.S. growth is estimated at 2.4%, even allowing for the hit from the government shutdown.
  • Consumers drive 70% of the U.S. economy. With U.S. unemployment at a low 4%, they will continue to account for two-thirds of U.S. growth in 2019.
  • Investment in the U.S. will be solid, with firms favouring the U.S. over Canada and Mexico because of the risks around the USMCA.
  • The U.S.-China trade war will drag trade down. For Canada, exports will be at 1.5% — about half of last year’s rate.


Chief Economist and Managing Director for BMO Financial Group

Q: In terms of trade and the new NAFTA deal, what does that mean for Canada?

“The consumer and the housing sector have been the workhorses for the Canadian economy since the recovery began almost ten years ago. We've relied almost exclusively on the two cylinders of housing and big-ticket spending, and they both have clearly taken a big step back in recent months.”

  • The U.S.-China trade negotiations are arguably the biggest economic risk.
  • Steel and aluminum tariffs still weigh on Canada and could shave half a percentage off growth if they continue. Expect the USMCA to pass, but it could turn into a political pawn between Canada and the U.S.
  • With global oil prices down $15 on average, expect modest business investment because of the uncertainty in the energy sector.
  • Domestic spending is slowing, as both consumer spending and the real estate market have taken a step back.
  • There is, however, support in growth from robust population increases, as Canada’s population rose by 1.4% last year — the strongest increase since the early 1990s.
  • Overall, Canadian growth should be at 1.75% after inflation — down from last year’s 2% growth.
  • Canada’s unemployment will remain above 5.5%, which is still the lowest its been in over 40 years.
  • Average inflation will be less than 2%, which will be just enough for the Bank of Canada to nudge rates slightly higher. Two rate hikes are likely.


Managing Director and Chief Economist for CIBC World Markets Inc.

Q: What are your predictions for the financial markets in 2019??

“I do think we're talking about a very middling economic picture, and I think that's how capital markets are going to be reacting. It's that mix of [some] good news … But no one's really calling for a boom either.”

  • Equity markets may climb and descend over the course of the year, with a similar story as this year playing out as expectations re-shift for 2020.
  • By 2020, U.S. fiscal stimulus will run dry and global growth will edge down another notch. While the consensus for S&P 500 earnings is 10% growth in 2020, this seems unlikely as growth slows.
  • Money market returns might run a bit ahead of bond market returns in 2019.
  • The Bank of Canada may look for one good quarter and then nudge rates up. However, because of Canada’s modest 2% growth, it shouldn’t be necessary.
  • The bond market might have another rally later in the year as we look ahead to a slower 2020.
  • Average world oil price will recover and land around $50 a barrel, with a potential peak at $60 per barrel near the end of the year.


Chief Economist and SVP for TD Bank Group.

Q: What financial indicators are you looking at that you think our audience should know about?

“The first quarter of this year could be a make or break quarter. And the reasons I say that is because we are starting to see some indicators turn on the sentiment.”

  • The inverted yield curve has a good track record indicating market performance, especially in the last three recessions. There is so much knowledge around the shape of the yield curve that financial markets are conditioned to interpret that as a recession signal and respond.
  • Because of high corporate debt, watch credit spreads and yields. But be cautious, as they can send mixed signals. For example, in 2008, credit spreads peaked well into the recession cycle.
  • Once you see these indicators move in a certain direction, look if they caused a transmission into the real economy. Confidence indicators are good early warning signs. There’s two types you can go with: consumer confidence and business sentiment indicators. Business sentiment indicators will be the lead in this cycle, as businesses hold the purse and are where investment and hiring intentions come from.
  • ISM indicators from Germany, France and other countries decreased more than expected.
  • Recently, the U.S. ISM indicator deteriorated by 5 percentage points, which is consistent with our expectation of slower economic growth.
  • We are facing an enormous amount of event risks in the first quarter, such as the U.S. government shutdown, the U.S.-China trade war and potential auto tariffs. Politicians need to step up and deliver because we have very fragile market sentiment occurring.


Chief Economist and Strategist for National Bank of Canada and National Bank Financial

Q: What is changing in Canada that is bringing about disruption?

“Developing [Canada’s] resources in a responsible way, I think, is critical to ensure fair distribution of wealth in Canada and the social economic wellbeing of our regions that are still 70% of our population.”

  • Ten years ago, 16% of Canada’s workforce was age 55-plus. Now it’s 22%. This means there will be no wage inflation, as those workers are content to just keep their jobs.
  • By next year, the GTA may become the second largest concentration of knowledge workers in North America, just behind the San Francisco Bay area. Montreal is in the top 10, and Vancouver is not far behind.
  • The multiplier effect of the knowledge economy is three-times higher than manufacturing. Case in point, Vancouver, Montreal and Toronto have accounted for 74% of job creation in the past two years, 60% over the past decade.
  • 60% of our population aged 25 to 34 now has a post-secondary education — the highest level of all the countries in the Organization for Economic Co-operation and Development (OECD).
  • Last month, for the first time on record, 83% of people aged 25 to 54 were working in Canada — 4 percentage points higher than in the U.S.
  • There’s a flip side to these successes. Canada’s three largest cities — the greater areas of Toronto, Montreal and Vancouver — account for 35% of the GDP. In the U.S., the top three cities only account for 15% of the GDP.
  • This leads to reduced social acceptance of the resource development sector. According to the International Institute for Sustainable Development, Canada is the best endowed country in the G7 in terms of wealth, a lot of which comes from the resource sector. Resources should be developed responsibly.