Full speed ahead for Canadian economy in 2013: RBC

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OTTAWA — Canada’s largest private sector bank is taking a relatively bullish stance on the prospects for the economy going forward.

The Royal Bank’s latest quarterly outlook predicts growth will accelerate to 2.4% next year and continue to expand to 2.8% in 2014, following a year that saw the weakest growth since the recession and a virtual stall in the third quarter.

The forecast is slightly rosier than the Bank of Canada’s call for 2.3 and 2.4% growth in the two years, and even more at odds with the consensus forecast of 2.0 in 2013.

The bulwark of the economy continues to be the resource sector — with Alberta and Saskatchewan supporting much of the growth in both years.

But RBC chief economist Craig Wright says he believes the global economy is putting a number of hiccups that occurred in 2012 in the rear view mirror and is ready to start accelerating again.

That will be good for Canadian exports, he says, which is the key reason the country’s economy underperformed this year, at an expected two per cent. It braked to as low as 0.6% in the summer months.

The sanguine view on exports is despite the fact that RBC sees the Canadian dollar strengthening to about US$1.05 by the end of 2013. A strong dollar makes Canadian products more expensive and less competitive in foreign markets.

“I would say we are cautiously optimistic,” Wright said. “We’re slightly more upbeat than consensus, but not dramatically so.”