While Canadian growth is tepid in 2013 at 1.7 per cent, the outlook for 2014 is better, says Glen Hodgson, senior vice-president and chief economist at the Conference Board of Canada. Speaking on ‘Canada’s Economic Outlook: Better Prospects Ahead in 2014’ at Mercer’s 2014 Compensation Planning event, he said the economy should grow by 2.4 per cent next year. Five factors are behind Canada’s lackluster performance, he said. The Canadian consumer is overstretched and rising interest rates will eventually hurt consumers. People are getting it that they can’t afford everything, he said, and this is breaking consumption growth in economy. Since consumption accounts for 60 per cent of economic growth, this will impact future growth. As well, the external economy and capacity constraints in the energy sector are limiting trade growth. The lack of pipelines is hurting Canada’s ability to export oil and Canada is just starting to realize the U.S is becoming more self-sufficient. As a result, new trading partners for Canadian goods need to be found. Other factors include the fact the recent pace of private investment won’t be maintained, government fiscal restraint is already reducing spending in that area, and the retirement of an aging population will tighten labour markets and drive up costs.
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