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National Highlights Economic The Conference Board of Canada, in its Spring 2013 Metropolitan Outlook, estimates real gross domestic product (GDP) growth in Canada in 2012 was 1.9%. Canada's economy in 2012 benefitted from strong resource prices, a stable national economy, low interest rates and a strong currency. However, the near-term forecast for the national economy depends heavily on the financial and economic wellbeing of the global community, most notably the U.S. and European Union. While the U.S. economy is expected to generate increased momentum in 2013 with a more robust recovery in 2014, there is continued vulnerability in the European Union. Although the European Union's emphasis to protect the Euro was positively received by the business community, Europe will provide little support for global growth while attempting to recover from the financial crisis. For 2013, Canada's real GDP's projected growth is 2.1%. The Conference Board of Canada's Winter 2013 Metropolitan Outlook notes the U.S. is expected to experience stronger real GDP growth in 2013 of 2.4%, up from 1.8% in 2012. Positive news for the U.S. economy includes stronger consumer confidence and spending, stronger job growth (unemployment rate falling below 8%), real estate markets on the mend and growing private business investments. American consumers are replacing less efficient vehicles, driving auto sales, which in turn will bolster the Canadian production of automobiles and parts. The U.S. market will receive roughly 80% of this production. In the housing market, excesses in U.S. real estate have finally dwindled after six years of correction. This has resulted in increased new home construction, which will boost Canadian lumber exports and prices over the next few years. However, outside of the resource sector, the 4 strong Canadian dollar will continue to pose challenges for Canadian exporters. Within Canada, challenges for the economy include weaker consumer spending, record levels of household debt, a slower real estate market, moderate income gains, weakening oil exports, high prices attributable to increased competition from other countries and restrained government spending. The Bank of Canada reports that despite weak growth in the second half of 2012, Canada in 2013 is projected to regain some momentum. Annual average growth in 2013 is projected to be 1.5%. The economy is then expected to grow by 2.8% in 2014 and 2.7 % in 2015.The economy is expected to reach full capacity by mid-2015. Statistics Canada reports real gross domestic product rose 0.2% in January 2013, after a 0.2% decrease in December 2012. Manufacturing was the largest contributor to the January growth. The value of the Canadian dollar against U.S. currency saw little fluctuation in 2012 compared to 2011 closing values; the value continues to hover around parity in 2013. At the end of 2013's first quarter, the value of the Canadian dollar stood at $1.02 U.S. As with the currency value, prime rate remains unchanged over the previous two years at 3.0% and the Bank of Canada's overnight rate remains at 1.0%. Canada's inflation rate is expected to remain subdued over the next few years, rising gradually to 2.0% by mid-2015. As of April 2013, Canada's unemployment rate in 2013 is expected to be 7.1%, similar to 2012's rate of 7.3%, and national employment will improve 1.7% in 2013. The Winnipeg Barometer Report | Volume 4, 2013