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2016/2017 Updated Outlook for Canada, U.S.

Expect 2016 to be a transitional year for the Canadian economy – and the U.S. to continue its strong performance. With interest rates in Canada unlikely to rise until ...

Expect 2016 to be a transitional year for the Canadian economy – and the U.S. to continue its strong performance. With interest rates in Canada unlikely to rise until late next year, and the lower-value loonie expected to be with us for some time, BTY sees better times for the Canadian economy overall in 2017.

Speaking after attending the Vancouver Real Estate Forum on March 30, 2016, Connor Falls, Director of BTY’s Pacific region practice, shared that major lenders also echo BTY’s outlook that the current economic climate will bear fruit for certain sectors in 2017. The Forum featured more than a dozen presentations from a broad range of perspectives.

“Most confirmed what our own research updates have been indicating,” said Falls. “We’re already advising clients on many viable sectors that will, in both the short-term and the long-run, be ripe for growth opportunities in real estate and infrastructure development.”

While Alberta and the other oil producing provinces continue to struggle in the low-oil price environment, BC has emerged as the frontrunner – and in BC, Victoria has the best prospects for the next decade. The weak loonie continues to make Canada – and especially BC – a very attractive place for foreign investment, particularly in real estate.

Although the weak Canadian dollar has long been expected to boost manufacturing exports to the U.S., the expectations have yet to break out. The reason is that 70 per cent of what Canada sells to its main trading partner, the U.S., is going to its manufacturing industry, which accounts for 12 per cent of the U.S. economy. That sector is seeing a slowdown, due in part to the strengthening greenback.

On the whole, the U.S. economy is motoring along nicely, creating 250,000 jobs a month. Salaries are increasing and credit is rising for the first time in years. The positive performance is leading to attempts to raise interest rates without appearing to do so. The stealth mode approach seeks to avoid disturbing the bond markets.

Canada, on the other hand, is keeping interest rates low and could raise them – most likely slowly — toward the end of 2017, according to Benjamin Tal, Chief Economist for CIBC World Markets, who gave the opening address at this year’s Vancouver Real Estate Forum. Higher rates are seen as the single greatest threat to economic recovery.

Ian Wilkinson, a Partner at BTY who leads the Lenders Services team based in Vancouver, found the insights shared during the event compatible with BTY’s escalation and growth outlook published in the firm’s Market Intelligence Report.

“We’re seeing Canada’s leading economic advisors now sharing a similar vision for which regions they also see as leading growth this year and which sectors they see may dampen the momentum, at least in the short-term.”

BTY is the leading advisory firm for the development industry in the Vancouver market. With 12 offices in North America and overseas, we draw on 37 years of industry experience to provide clients with local expertise informed by global perspectives.