The Bank of Canada now projects that U.S. economic growth will average 2 to 2 1/2 per cent in the last half of this year and the first half of 2007. Activity should then recover to above 3 per cent in the second half of next year and throughout 2008.
Slower U.S. growth has clearly caused Canadian GDP growth to fall short of expectations in the second and third quarters. After expanding at a 3.6 per cent annual rate in the first three months of this year, GDP growth slowed to only 2 per cent in the second quarter, and we expect a similar figure for the third quarter.