Past and recent movements in energy prices and in the exchange rate for the Canadian dollar, along with competitive pressures from China and other newly industrialized economies, are giving rise to significant ongoing adjustments in the Canadian economy.
Given these adjustments and the slow growth of productivity in recent years, the Bank has slightly reduced its estimate of potential output growth for 2005 and 2006. The Bank projects that the economy will grow in line with production potential through 2007, with growth averaging 2.8 per cent this year, 2.9 per cent in 2006, and 3.0 per cent in 2007.