Economic outlook: Why the time is right for entrepreneurs to invest |
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2014 Economic outlook: Time is right to invest


Pierre Cléroux - Vice President, Research and Chief Economist
By Pierre Cléroux Vice President, Research and Chief Economist


The Canadian economy has experienced the best economic performance among the developed economies over the last five years. But that scenario is changing as we head into the final months of 2013.

Canada’s GDP grew by 2.4% on average between 2009 and 2012 despite a slow recovery in the U.S. and ongoing troubles in Europe. During those years, low interest rates stimulated the housing sector, encouraged consumer spending and boosted business investment following the 2008-2009 recession.

Uncertain economic picture

Now the situation is more uncertain. The Canadian housing sector seems to be finally running out of steam and consumers are burdened by heavy debt loads.

At the same time, business investment is expected to be lower than in the past three years due, in part, to a slowdown in the resource sector where lower commodity prices are biting.

So the outlook for the rest of the year is not sparkling. But the situation should improve in 2014. The global economy is on the mend with progress not only in the U.S. but also in Europe where a long recession is coming to an end.

Exports set to rise

As the U.S. economy strengthens, especially the housing market, Canadian exports are expected to rise, notably sales of machinery and equipment and lumber products.

That’s important for both exporters and the economy as a whole. A stronger export performance should help take up some of the slack in the domestic economy.

Reasons for confidence

And despite modest growth prospects this year, entrepreneurs still have many reasons to be confident.

  • Unemployment remains low, especially compared to other developed economies, and Canadians’ average earnings continue to rise. The solid jobs picture will sustain consumer spending—although at a lower rate—and economic growth.
  • Credit remains plentiful for businesses and households. And interest rates are still close to a historic low.
  • Canada continues to benefit from the strong global demand for natural resources, creating economic activity in every part of the country.

For all of these reasons, Canadian businesses are well positioned to take advantage of future global economic growth. Both inside and outside of Canada, business opportunities continue to develop.

Besides the brighter picture in the U.S. and Europe, the emerging middle class in developing countries like China is offering new markets for Canadian products and services.

Emerging business opportunities

And entrepreneurs are also finding new markets in Canada. For example, more and more Canadians are shopping or making their buying decisions online and the use of smart phones is accelerating the trend.

So despite some softness in the economy, now is the right time to take advantage of favourable investment conditions and position your business for a new season of opportunity.