Economic slack likely to persist

The Bank of Canada and International Monetary Fund still expect economic growth in Canada to accelerate through the course of this year. Admittedly, net exports are unlikely to remain a drag on GDP growth, but cautious business investment, further declines in housing activity and slower consumption growth point to overall growth of just over 1% in 2013. Under those circumstances, the amount of excess capacity, which the Bank of Canada already admits is bigger than it previously thought, would only increase further.