This implies that the large surpluses seen recently will not persist and that governments will bring their books into balance. Once again, it is important to think of this as a mild, and likely short-lived, cyclical slowdown. The Bank projects final domestic demand to grow by 4.2 per cent in 2006, by 3.2 per cent next year, and by 2.8 per cent in 2008.
However, slowing U.S. growth will have a clear impact on growth in the Canadian economy in the near term. The Bank is projecting that net exports will subtract 1.3 percentage points from growth this year and 0.7 percentage points next year, and that net exports will not contribute to growth in 2008.