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- BMO’s Blue Book combines the expertise of BMO’s economists with information on economic conditions provided by its bankers
- This edition focuses on the impacts of high inflation and the corresponding effects on the whole economy in Canada and six key business areas
- Real GDP is expected to grow by 3.5% this year
TORONTO, April 6, 2022 /CNW/ – As Canadians adjust to the “new normal,” consumers and organizations face new challenges such as rising inflation and interest rates, geopolitical risks, distribution supply chain and fluctuations in commodity prices. According to the brand new BMO Blue BookDespite uncertain times, the economy continued to show resilience, reflected by strong balance sheets, high household savings, inventory rebuilding and an interest rate environment that remains relatively low.
The BMO Blue Book is published jointly by BMO’s Economics Department and its Commercial Banking Services in Canada. It combines the expertise of BMO’s economists with that of its commercial bankers to paint a portrait of the economy of Canada and each province, as well as a view of the key business sectors: technology and innovation, agriculture, real estate financing, automotive, hospitality and transportation. This edition places particular emphasis on the impacts of inflation given its recent rise and the corresponding effects on the economy as a whole.
“The Canadian economy is growing at a healthy pace, most industries and labor market segments have fully recovered from the pandemic, and the Bank of Canada now the tightening policy,” said Doug Porter, Chief Economist, BMO Financial Group. “Real GDP is expected to grow 3.5% this year, down from the 4.6% pace in 2021, but still well above potential growth. In the meantime, inflation proving persistent and clearly superior to the Bank of from Canada target, expect another steady stream of interest rate hikes through 2023.”
“Consumers and businesses, whether smaller or scalable organizations or large enterprises, continue to face one of the most challenging times in recent history,” said Nadim Hirji, Co-Head, Canadian Commercial Banking, BMO Financial Group. “The BMO Blue Book represents another part of our efforts to provide expert content and resources to help our business customers through these uncertain times.”
“Through our industry specialization, industry expertise and innovative resources like the BMO Blue Book, we continue to develop ways to meet the individual needs of our clients,” said Christine Cooper, Co-Head, Commercial Banking at Canada, BMO Financial Group. “We have an on-the-ground view of what the outlook looks like, helping our clients gain insights related to the recovery in some of the biggest sectors driving the Canadian economy.”
BMO’s Blue Book covers key industries as follows:
Technology and innovation:
- Some tech companies are embracing a return to the office. This unexpected shift in narrative has seen companies push for culture and collaboration, traits they believe are best established in an office environment.
- Demand for tech employees remains high, as offices open, flexibility remains key to attracting and retaining talent.
Agriculture:
- As consumers feel the prices at the grocery store, Canadian produce agriculture is feeling the pressure as the costs of growing, producing and sourcing our food continue to rise.
- Supply chains are still catching up after two years of severe pandemic disruption. As the world emerges from lockdown, demand for virtually everything has increased and the cost of transporting goods is skyrocketing.
Immovable:
- from Canada The housing market has shown incredible strength during the COVID-19 pandemic, and we see that will continue even with the advent of higher interest rates.
- We see strong and growing tailwinds to help offset interest rate headwinds.
Hospitality:
- The success of the recovery over the past two years can be attributed to a combination of patient and capable lenders, strong government support programs and the hospitality industry adjusting the way it delivers its services very effectively to s adapt to current economic realities.
- Higher inflation and the corresponding higher interest rates affect these businesses. Decisions are dictated by this new environment, affecting both the level of corporate debt and decisions about the type and duration of interest rates associated with their debt.
Transport:
- Strong freight demand coupled with constrained global supply chains, including freight-hauling capacity, provides a positive fundamental price backdrop for the trucking industry heading into 2022.
- Soaring prices for oil, nickel, aluminum, copper, wheat, etc., coupled with a likely shift in the global supply of these commodities away from Russia/Ukrainewill be a strong incentive to increase production in these sectors.
Auto:
- An interesting factor in the industry is inflation. This happens with new and used cars. The mismatch between supply and demand has led to price increases in both areas – used cars are now selling at historic highs.
- Dealers are also monitoring the effect of higher interest rates on auto purchases. Even with recent increases, rates are still near historic lows, so consumer setbacks are really just a matter of perception rather than reality.
The BMO Blue Book also provides an outlook for each Canadian province:
Western Canada:
- British Columbia’s economy is expected to grow 3.8% this year, slightly above the 3.5% rate estimated for all of Canada. The provincial economy has weathered some massive shocks relatively well, including the pandemic and flooding.
- the alberta The economy is expected to lead the country with growth of 5.0% this year, as soaring oil prices boost consumer and business confidence.
Grasslands:
- the Saskatchewan The economy will likely experience solid growth of 3.8% this year, climbing back above the national average after underperforming in seven of the past eight years.
- the Manitoba the economy is expected to grow 3.3% this year, second only to the national increase, but only after a relatively weaker performance in 2021. It remains a stable province, with exposure to many industries, but no excessive weight in a single sector.
Central Canada:
- from Ontario the economy is expected to grow 3.4% this year, down slightly from the national average and slowing after a 4.4% rebound in 2021. COVID-related restrictions at the start of the year have again disrupted the recovery, but the impacts were temporary and less significant than in previous waves.
- the Quebec The economy likely posted robust growth of 6.2% last year, which could lift the country out of the pandemic. Growth is expected to slow to a more modest 2.9% this year, but this would still be well above the province’s potential.
Atlantic Canada:
- Atlantic Canada is doing well, with growth in the region expected to exceed its potential this year. As travel flows resume more significantly for the summer 2022 season, the region will benefit. Population flows are also a very positive story, as migration from other parts of the Canada stimulates consumer demand and housing.
BMO’s full Blue Book can be viewed and downloaded here:
https://bmoficc.bluematrix.com/sellside/EmailDocViewer?encrypt=88f83ff3-72bc-4cb4-94ea-73b235ba71a2&mime=pdf&co=bmoficc&source=mail
About BMO Financial Group
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider – the 8th largest bank, by assets, in North America. With total assets of $1.02 trillion as of January 31, 2022 and a diverse and highly engaged team of employees, BMO offers a wide range of personal and commercial banking, wealth management and investment banking products and services. investment to more than 12 million customers and leads through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets.
SOURCE BMO Financial Group
For further information: For media inquiries: Kate Simandl, Toronto, [email protected], (416) 867-3996; Peter Scott, Toronto, [email protected](416) 867-3996
