The economy has recovered from the temporary disruption caused by the wildfires earlier this year and the slump in mining-related investment, triggered by the collapse in oil prices last year, is finally fading. Unfortunately, the housing downturn, which is already in full swing in British Columbia, is likely to spread and could become an even bigger drag on economic growth. We expect GDP growth to be broadly unchanged at 1.2% in 2017, up only trivially from 1.1% in 2016. The election of Donald Trump as the next US President brings both upside and downside risks. In the short-term, the prospect of a US fiscal stimulus could be a positive, but Trump’s pledge to renegotiate NAFTA could, ultimately, be a big negative for Canadian exports and investment.
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