Archived - Backgrounder: Results of the Department of Finance’s June 2014 Survey of Private Sector Economists

The Department of Finance regularly surveys private sector forecasters for their views on the Canadian economy. The average of private sector forecasts forms the basis for the economic assumptions used for fiscal planning purposes in the budget and the fall Update of Economic and Fiscal Projections. The use of the average private sector forecast introduces an element of independence into the Government’s economic and fiscal forecast.

In June 2014, the Department of Finance surveyed the following private sector forecasters for their updated views on the Canadian economy: BMO Capital Markets, Caisse de dépôt et placement du Québec, the Canadian Federation of Independent Business, CIBC World Markets, the Conference Board of Canada, Desjardins, Deutsche Bank of Canada, IHS Global Insight, Laurentian Bank Securities, National Bank Financial, Royal Bank of Canada, Scotiabank, TD Bank Financial Group, and the University of Toronto (Policy and Economic Analysis Program).

The results from the June 2014 survey, together with the December 2013 survey, which was used in Economic Action Plan 2014, are presented in Table 1.

• On average over the 2014 to 2018 period, the outlook for real growth is broadly in line with the Economic Action Plan survey, at 2.3% per year.
• The outlook for gross domestic product (GDP) inflation in 2014 has been revised up to 2.1% from 1.6% in the Economic Action Plan survey, but revised down in 2015.
• The expected level of nominal GDP is about $11 billion higher than in the Economic Action Plan survey in 2014. This difference declines to about to $8 billion in 2015 before gradually rising to $11 billion by 2018.
• Interest rates are expected to rise going forward, but at a slightly less rapid pace than in the previous survey.
• The Canadian dollar is expected to remain below parity over the projection horizon and lower than expected in the Economic Action Plansurvey.
• The economists’ expectations for the unemployment rate are largely unchanged. They expect the unemployment rate will decline from 6.9% this year to 6.2% in 2018.
• The economists revised up their outlook for the Consumer Price Index inflation rate to 1.9% in 2014 from the 1.5% anticipated at the time of the Economic Action Plan. Beyond 2014, they anticipate the inflation rate to return to 2.0%.
• Following a weak first quarter, real GDP growth in the U.S. is now projected to be 2.3%, down from 2.7% in the previous survey. Growth is expected pick-up to an annual rate of about 3% thereafter.