new forecast Canadian economic by TD Bank outlook

new forecast Canadian economic by TD Bank outlook ; A major Canadian bank predicts the economy will overcome any effects from the disaster unfolding in Japan and expand significantly faster than was expected a few months ago. The TD Bank’s new forecast has the Canadian economy growing strongly in the first half of this year — overlooking both the Japan and Middle East crises — and slowing slightly in the latter half.

For the year, the chartered bank expects the economy will expand by three per cent, half a point more than its previous estimate and 0.6 percentage points higher than the Bank of Canada’s official projection.

The new forecast is not a major surprise — more and more of Canada’s financial institutions have been upgrading their scenarios. The economist consensus given to the Finance Department on Friday in preparation for the March 22 budget has moved to 2.9 per cent from 2.4 per cent in January.

TD chief economist Craig Alexander agrees the risks to growth have increased in number — particularly with the Middle East and Japan adding to uncertainty — but the most likely outcome remains for modest to strong growth in Canada this year, and moderate growth of 2.5 per cent next.

“You don’t want to minimize what’s happening in Japan and if the worst fears come true then Japan’s economy is going to do a whole lost worse,” said Alexander.

“But the risks are risks, they aren’t the most likely outcome. It’s still the case that the economic climate in the world is quite good. For Canada, we’re going to have moderate growth, low inflation, solid profit growth, low albeit rising interest rates ... this is actually a pretty benign economic environment.”

Alexander says as devastating as the disaster in Japan is in human terms, the macro-economic impacts are small since global supply chains will find substitute sources for output to replace the affected region.

While it predates the Japanese natural disaster, Statistics Canada released fresh data Wednesday showing that Canada’s still depressed manufacturing sector had a banner January, with activity picking up by a massive 5.5 per cent in volume terms.

The data add credence to December’s trade surge, which even after a downward revision showed exports rising about eight per cent.

“Without a doubt, the manufacturing data shows that underlying economic growth is improving,” said David Madani of Capital Economics, although he wondered if the momentum can be sustained.

TD’s sunnier outlook, as with other major institutions that have revised upwards, stems from the strong 3.3 per cent growth recorded in the fourth quarter, a more optimistic outlook for Canada’s biggest trading partner — the United States — and higher demand for commodities.

TD suggested that growth will be particularly prominent in the Prairies and Newfoundland and Labrador, helped by stronger financial positions from the governments in those regions, and strength in commodity prices.

But even manufacturing-heavy Ontario saw its growth profile rise from 2.4 per cent to 2.9 per cent in the TD outlook. For the latest updates PRESS CTR + D or visit Stock Market news Today

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