January's discouraging external trade figures suggest that the economy began the year on a weak footing. Unfortunately, exporters are likely to struggle throughout the year. Although the Canadian dollar has fallen significantly from levels a few months ago, it remains high by historical standards (see Chart), suggesting that the cheaper currency is no remedy for the underperforming export sector. Accordingly, with signs elsewhere pointing to subdued business investment and declining housing activity, we expect Canada's economy, after growing by 2.0% last year, to grow by only 1.5% this year.
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