Canada: Economic and Fiscal Update 2021

Despite some hiccups, the Canadian economy has continued to recover since April’s budget. Real GDP should be back to pre-pandemic levels at the first quarter of 2022. The number of jobs has been higher than before the pandemic since last September, and the unemployment rate has fallen almost to the February 2020 level. In addition, prices have risen faster than expected, leading to more sustained growth of nominal GDP. The update predicts a 12.5%  increase in nominal GDP for 2021 (similar to our forecast), which is substantially higher than the 9.3%  increase set out in last spring’s budget.