A new report from the Royal Bank of Canada offers a positive outlook for the nation's economy, predicting Canada will miss the economic storm hammering Europe and other parts of the world, and make significant advances.
With just a couple of weeks left to go in June, the final month of the second quarter, RBC predicts Canada's economy will climb to 3.1 per cent growth this quarter. In the first quarter of 2012, growth was just 1.9 per cent.
Overall the economy will also record a 2.6 per cent gross domestic product gain for both this year and next year, according to RBC's surprisingly rosy forecast due to be released Tuesday.
RBC economists attribute the soft first quarter growth to temporary factors, such as mining and energy shutdowns and reduced demand on utilities due to mild weather.
The economy should catch up in the second quarter, RBC said, largely due to significant job growth in March and April and solid policy-making decisions in reaction to financial troubles in Europe.
The news comes roughly one week after Bank of Canada Governor Mark Carney acknowledged the ongoing fragility of the Canadian and global economies by announcing the key lending rate would remain frozen at rock-bottom prices for a while longer.
The lending rate has now remained at 1 per cent for each of the central bank's past 14 policy announcements. Carney had hinted in recent months that the Canadian economy was gaining strength, however, and an upward bump could be on the horizon for the key lending rate. But that hasn't happened.
The Bank of Canada had predicted the economy would experience 2.5 per cent growth in the first quarter of 2012, but the economy fell short of those expectations with just 1.9 per cent growth.
Last week, Statistics Canada's Labour Force Survey for May showed new job creation had slowed for that month after two previous months of unexpected large gains.
The number of people working in Canada bumped up slightly with 7,700 jobs added to the economy in May, mostly among self employed, government and part-time workers, which offset losses in private sector full-time work.
Economists had predicted 5,000 new jobs.
In March and April, 140,000 new jobs were created in Canada.
With files from The Canadian Press
