Canadians are spending more on services as public health measures ease and spending on goods remains solid. Housing activity has remained strong and is expected to moderate, but to still-elevated levels. Business investment and exports are both picking up, and higher prices for many of the commodities Canada exports are bringing more income into the country.
Higher interest rates should moderate growth in domestic spending as we move through this year and next. At the same time, Canada’s productive capacity should be helped by robust business investment, improved labour productivity and higher immigration. Putting this all together, the Bank forecasts the Canadian economy will grow 4¼% this year, before moderating to 3¼% in 2023 and 2¼% in 2024.