Economic growth is projected to accelerate to 2¾ per cent by 2015, along with a desirable rebalancing towards exports and business investment. Exports are set to gain momentum, supported by stronger foreign-market growth, the recent currency depreciation and continuing energy-sector expansion. Business investment should also accelerate, boosting capacity and cost competitiveness. Consumption growth is likely to strengthen, while housing investment should decline towards a more sustainable level. With economic slack fully absorbed, inflation is projected to rise to nearly 2% by late 2015.
As inflation approaches the 2% target, monetary accommodation should be progressively withdrawn. Fiscal consolidation should continue as planned. Most notably, provincial governments should continue to work on reforms that would limit growth in health-care expenditures. To reduce housing-related risks to financial stability and improve lender incentives, mortgage-insurance coverage should be limited to only part of lenders’ losses.
Note: All data definitions based on internationally comparable standards and may differ in specific cases from common national definitions.