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The Bank of Canada is still wary about the future. It’s calling its new outlook a “central scenario,” not a forecast. There is less detail than usual, but it does come with numbers: policy-makers think GDP will bounce to an annual growth rate of 7.1 per cent in the third quarter from the 13.1 per cent contraction in the second quarter.
Things should start to feel better during what the central bank is calling the “reopening” phase. But the rebound could be short and sweet, just as the downturn was quick and brutal. As far as the best minds at the Bank of Canada can tell, we’re setting up for a long “recuperation” phase, during which growth will slow from its current post-recession burst.
The Bank of Canada’s central scenario predicts GDP will contract 6.8 per cent in 2020 and then increase by 4.9 per cent in 2021 and 3.2 per cent in 2022. In other words, it could take another year to get back to where we were at the end of 2019, and maybe longer because there are more negative variables at work than there are positive ones.
“Overall, the risks appear to be tilted to the downside, largely because of the potential for a second wave of the virus,” policy-makers said in the Monetary Policy Report.
Financial Post
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