There will be some offsets, but they are both partial and of uncertain timing: Canadian consumers will spend less on energy, but they could save some of the windfall rather than spend it; U.S. economic growth will be stronger, which – along with a lower Canadian dollar – should boost Canadian exports, but the speed of the export response is uncertain given the export capacity losses of the last decade.
The Bank has been projecting a natural sequence of higher non-energy exports, higher investment and higher employment, which is needed to restore balance to the Canadian economy and reduce financial stability risks. This sequence is gaining traction and will be strengthened by the combination of lower oil prices, stronger U.S. growth and a lower Canadian dollar.