Welcome!

News Feed Item

'Exposed' Canadian economy to see economic slowdown in 2013: CIBC

Bank drops GDP growth forecast three-tenths to 1.7% but sees pick-up in 2014

TORONTO, Dec. 19, 2012 /CNW/ - Without key domestic economic drivers to shelter Canada from a continued weak global economy, GDP growth will slip to a very mediocre 1.7 per cent in 2013, finds CIBC's latest Canadian economic forecast.

"Having earlier tapped fiscal stimulus and a housing boom to shelter the economy from sluggishness abroad, the country's ability to set its own course is now much more limited," says Avery Shenfeld, chief economist at CIBC. "Escaping economic mediocrity will depend on the kindness of strangers, with exports and related capital spending critical to Canada's fate in 2013-14."

Mr. Shenfeld says that the global economy continues to face significant headwinds and as a result he has cut his global outlook for 2013 by two-tenths to three per cent. "It's too early to get the full benefits of policy stimulus in Asia, Europe is too stubborn to soften its fiscal drag enough and amplify ECB bond purchases, and Washington is too wedded to getting going on fiscal tightening stateside, if not the full fiscal cliff."

He adds that while Chinese GDP could show improvement towards an eight per cent pace as early as Q4 of 2012, it is not likely to have much of an impact on other economies as Chinese imports are currently showing no growth at all on a year-over-year basis. As such, he expects there to be a delay before crude oil and other resources rebound in price.

"The absence of a helping hand from abroad will leave Canada exposed," says Mr. Shenfeld. "Blaming temporary disruptions in energy production in Q3 for recent disappointments misses the point: GDP excluding resource extraction has also been decelerating, the loss of home building momentum will offset greater oil output.

"Our downgraded 1.7 per cent growth forecast for 2013 will trail the U.S. pace and is three ticks slower than our last projection. Household debt burdens are keeping consumption bounded by the moderate growth pace for real incomes. Governments also face leaner-than-expected coffers due to downward revisions to nominal GDP expectations, and will be introducing further spending restraints or tax hikes for fiscal 2013."

The report notes that in the near term, this environment will see investors maintain a risk-adverse attitude and see further downward adjustments to corporate earnings expectations. Assets tied to global growth, including commodities and the most cyclical equities, could be flat or see some first half slippage. This will exert near-term downward pressure on the loonie. Equities with less cyclical earnings profiles and well-backed dividends, as well as investment grade corporate bonds, will remain in favour for the next couple of quarters.

Optimism for 2014

"Diamonds are forever, but weak economic growth need not be," adds Mr. Shenfeld. "With its household sector healing, the U.S. should be positioned to lead the way towards a better year come 2014 if, as we expect, new fiscal tightening measures do not hit as deeply that year. Don't underestimate the importance of the upswing underway in housing. As it gathers steam, it will drive related consumer spending ("new living room, new couch") and renovation ("those cabinets have to go"), in addition to actual home-building jobs."

He also expects by 2014 that China will be feeling the full benefit of its own policy easing and the improvement in U.S.-bound exports. Even Europe, if it finally recognizes the need for both a softer hand in fiscal tightening and a more aggressive central bank, might at least register positive growth at that point.

"These developments will propel 2014 exports and resource sector capital spending in Canada, finally delivering the 2½% quarterly growth rates that the Bank of Canada has been expecting, or hoping for, in the past two years," adds Mr. Shenfeld.

"The brighter news on that front, coupled with conservative starting valuations for equities, leaves room for a "risk on" rally in the coming summer and autumn. It's too far out to act on just yet, but by mid-2013, it should be time to shift portfolios into cyclical equities and industrial commodities to take advantage of that likely turn in sentiment."

He believes interest rates will hold steady in Canada through 2013 but that Governor Mark Carney's successor will nudge rates up 50-75 basis points in 2014.

The complete CIBC World Markets report is available at: http://research.cibcwm.com/economic_public/download/fdec12.pdf.

CIBC's wholesale banking business provides a range of integrated credit and capital markets products, investment banking, and merchant banking to clients in key financial markets in North America and around the world. We provide innovative capital solutions and advisory expertise across a wide range of industries as well as top-ranked research for our corporate, government and institutional clients.

SOURCE CIBC World Markets

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
Cloud promises the agility required by today’s digital businesses. As organizations adopt cloud based infrastructures and services, their IT resources become increasingly dynamic and hybrid in nature. Managing these require modern IT operations and tools. In his session at 20th Cloud Expo, Raj Sundaram, Senior Principal Product Manager at CA Technologies, will discuss how to modernize your IT operations in order to proactively manage your hybrid cloud and IT environments. He will be sharing bes...
Regardless of what business you’re in, it’s increasingly a software-driven business. Consumers’ rising expectations for connected digital and physical experiences are driving what some are calling the "Customer Experience Challenge.” In his session at @DevOpsSummit at 20th Cloud Expo, Marco Morales, Director of Global Solutions at CollabNet, will discuss how organizations are increasingly adopting a discipline of Value Stream Mapping to ensure that the software they are producing is poised to o...
SYS-CON Events announced today that delaPlex will exhibit at SYS-CON's @CloudExpo, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. delaPlex pioneered Software Development as a Service (SDaaS), which provides scalable resources to build, test, and deploy software. It’s a fast and more reliable way to develop a new product or expand your in-house team.
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm. In his Day 3 Keynote at 20th Cloud Expo, Chris Brown, a Solutions Marketing Manager at Nutanix, will explore t...
Five years ago development was seen as a dead-end career, now it’s anything but – with an explosion in mobile and IoT initiatives increasing the demand for skilled engineers. But apart from having a ready supply of great coders, what constitutes true ‘DevOps Royalty’? It’ll be the ability to craft resilient architectures, supportability, security everywhere across the software lifecycle. In his keynote at @DevOpsSummit at 20th Cloud Expo, Jeffrey Scheaffer, GM and SVP, Continuous Delivery Busine...
SYS-CON Events announced today that Outscale, a global pure play Infrastructure as a Service provider and strategic partner of Dassault Systèmes, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Founded in 2010, Outscale simplifies infrastructure complexities and boosts the business agility of its customers. Outscale delivers a secure, reliable and industrial strength solution for its customers, which in...
Most DevOps journeys involve several phases of maturity. Research shows that the inflection point where organizations begin to see maximum value is when they implement tight integration deploying their code to their infrastructure. Success at this level is the last barrier to at-will deployment. Storage, for instance, is more capable than where we read and write data. In his session at @DevOpsSummit at 20th Cloud Expo, Josh Atwell, a Developer Advocate for NetApp, will discuss the role and value...
SYS-CON Events announced today that CollabNet, a global leader in enterprise software development, release automation and DevOps solutions, will be a Bronze Sponsor of SYS-CON's 20th International Cloud Expo®, taking place from June 6-8, 2017, at the Javits Center in New York City, NY. CollabNet offers a broad range of solutions with the mission of helping modern organizations deliver quality software at speed. The company’s latest innovation, the DevOps Lifecycle Manager (DLM), supports Value S...
IBM helps FinTechs and financial services companies build and monetize cognitive-enabled financial services apps quickly and at scale. Hosted on IBM Bluemix, IBM’s platform builds in customer insights, regulatory compliance analytics and security to help reduce development time and testing. In his session at 20th Cloud Expo, Tom Eck, Industry Platforms CTO at IBM Cloud, will discuss how these tools simplify the time-consuming tasks of selection, mapping and data integration, allowing developers ...
In order to meet the rapidly changing demands of today’s customers, companies are continually forced to redefine their business strategies in order to meet these needs, stay relevant and continue to see profitable growth. IoT deployment and development is integral in this transformation, and today businesses are increasingly seeing the value of investing their resources into IoT deployments. These technologies are able increase ROI through projects such as connecting supply chains or enabling sm...
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, whic...
SYS-CON Events announced today that Peak 10, Inc., a national IT infrastructure and cloud services provider, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Peak 10 provides reliable, tailored data center and network services, cloud and managed services. Its solutions are designed to scale and adapt to customers’ changing business needs, enabling them to lower costs, improve performance and focus intern...
Everywhere we turn in our industry we can find strong opinions about the direction, type and nature of cloud’s impact on computing and business. Another word that is used in every context in our industry is “hybrid.” In his session at 20th Cloud Expo, Alvaro Gonzalez, Director of Technical, Partner and Field Marketing at Peak 10, will use a combination of a few conceptual props and some research recently commissioned by Peak 10 to offer a real-world consideration of how the various categories of...
Cloud applications are seeing a deluge of requests to support the exploding advanced analytics market. “Open analytics” is the emerging strategy to deliver that data through an open data access layer, in the cloud, to be directly consumed by external analytics tools and popular programming languages. An increasing number of data engineers and data scientists use a variety of platforms and advanced analytics languages such as SAS, R, Python and Java, as well as frameworks such as Hadoop and Spark...
SYS-CON Events announced today that Super Micro Computer, Inc., a global leader in compute, storage and networking technologies, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Supermicro (NASDAQ: SMCI), the leading innovator in high-performance, high-efficiency server technology, is a premier provider of advanced server Building Block Solutions® for Data Center, Cloud Computing, Enterprise IT, Hadoop/...