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Archived - Backgrounder: Results of the Department of Finance’s October 2012 Survey of Private Sector Economists

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The Department of Finance regularly surveys private sector forecasters for their views on the Canadian economy. The average of private sector forecasts forms the basis for the economic assumptions used for fiscal-planning purposes in the budget and the fall update. The use of the average private sector forecast introduces an element of independence into the Government’s economic and fiscal forecast.

In October 2012, the Department of Finance surveyed private sector forecasters for their updated views on the Canadian economy. The October survey of private sector forecasters includes the following forecasters: BMO Capital Markets, Caisse de dépôt et placement du Québec, CIBC World Markets, The Conference Board of Canada, Desjardins, Deutsche Bank of Canada, Laurentian Bank Securities, IHS Global Insight, National Bank Financial, Royal Bank of Canada, Scotiabank, TD Bank Financial Group, UBS Securities Canada, and the University of Toronto (Policy and Economic Analysis Program).

The results from the March and October 2012 surveys are presented in Table 1.

The average outlook for real gross domestic product (GDP) growth over the 2012 to 2016 period has not changed since the March 2012 survey. Real GDP growth is expected to be weaker than previously expected in 2013, but offsetting this, growth is expected to be stronger over the 2014 to 2016 period.

The private sector’s expectation for the unemployment rate is also largely unchanged from the March 2012 survey. The unemployment rate is projected to gradually fall to 6.4 per cent over the medium term.

The key impact of recent global economic volatility on Canada, a net exporter of commodities, has been through lower commodity prices. Lower commodity prices have had a significant impact on Canada’s GDP inflation, and hence, on nominal GDP. As a result, the private sector outlook for the level of nominal GDP is, on average, about $25 billion lower than expected in Budget 2012 between 2012 and 2016.

Private sector economists expect both short- and long-term interest rates to be lower over the forecast horizon compared to the March 2012 survey.

Table 1 Evolution of the Average Private Sector Economic Forecast
  2012 2013 2014 2015 2016 2017 2012-16
Real GDP Growth (%)
   March 2012 survey/Budget 2012 2.1 2.4 2.4 2.4 2.2 2.3
   October 2012 survey 2.1 2.0 2.5 2.5 2.3 2.2 2.3
GDP Inflation (%)
   March 2012 survey/Budget 2012 2.4 2.0 2.1 2.0 2.0 2.1
   October 2012 survey 1.3 2.0 2.1 2.1 2.1 2.1 1.9
Nominal GDP Growth (%)
   March 2012 survey/Budget 2012 4.6 4.4 4.6 4.4 4.2 4.4
   October 2012 survey 3.4 4.0 4.7 4.7 4.4 4.3 4.2
Nominal GDP Level ($ billions)
   March 2012 survey/Budget 20121 1,844 1,925 2,013 2,102 2,190
   October 2012 survey 1,822 1,895 1,984 2,078 2,169 2,262
   Difference (October - Budget 2012) -21 -29 -29 -24 -21
3-Month Treasury Bill Rate (%)
   March 2012 survey/Budget 2012 0.9 1.3 2.2 3.3 3.9 2.3
   October 2012 survey 1.0 1.2 1.8 2.6 3.4 3.9 2.0
10-Year Government Bond Rate (%)
   March 2012 survey/Budget 2012 2.2 2.8 3.6 4.3 4.5 3.5
   October 2012 survey 1.9 2.2 2.9 3.5 4.2 4.7 2.9
Exchange Rate (US cents/C$)
   March 2012 survey/Budget 2012 99.6 101.8 101.1 100.5 100.2 100.7
   October 2012 survey 100.2 101.1 100.1 100.5 99.5 98.1 100.3
Unemployment Rate (%)
   March 2012 survey/Budget 2012 7.5 7.2 6.9 6.7 6.6 7.0
   October 2012 survey 7.3 7.2 6.8 6.6 6.5 6.4 6.9
Consumer Price Index Inflation (%)
   March 2012 survey/Budget 2012 2.1 2.0 2.0 2.0 2.0 2.0
   October 2012 survey 1.7 2.0 2.0 2.0 2.0 2.0 1.9
U.S. Real GDP Growth (%)
   March 2012 survey/Budget 2012 2.3 2.4 2.8 2.9 2.8 2.6
   October 2012 survey 2.2 2.0 2.9 3.1 3.0 2.8 2.6
1 These values have been restated to reflect historical revisions from Statistics Canada released on October 1, 2012.
Sources: Department of Finance October 2012 and March 2012 surveys of private sector economists.