Since 2002, we have enjoyed the benefit of an almost 25 per cent rise in Canada’s terms of trade. With the average world price of oil over the past decade more than double that of the previous three decades, Canada’s resources are suddenly worth a lot – and we have the incentive we need to go dig them out of the ground.
In particular, some further improvement in domestic demand should materialise, supported by the accommodative monetary policy stance, improving financing conditions and the progress made in fiscal consolidation and structural reform. In addition, real incomes are supported by lower energy prices. Economic activity is also expected to benefit from a gradual strengthening of demand for euro area exports.