The Royal Bank published a report effectively saying, “Relax, it’s only a bump in the economy“, with a forecast that things economically will not be as bad as first predicted.
The full economic report by Craig Wright the Head Economist at RBC is actually a nice read, with a province by province break down of what the predictions for the coming few months might be.
Being a bit of an inflation zealot I did think the following paragraph is quite interesting:
The RBC report forecasts that Canada’s core inflation rate will likely trend higher this year though remain below the Bank of Canada’s two per cent target. Mitigating factors that have pushed the inflation rate lower, such as the impact of the rising Canadian dollar in 2007 and the retail discounting that Canadian companies have had to offer to compete for market share, will start to dissipate through 2008. By 2009, RBC expects the inflation rate to average close to the two per cent range.
This seems to imply that the rise in Gasoline price will either have subsided or have been absorbed into the economy (or maybe it might drop?). Interesting prediction, I don’t agree with it, I think it is an overly optimistic view.
For Ontario, a little more gloomy:
Ontario is labouring through its softest patch since the early-1990s recession.The provincial economy likely contracted in the first quarter and should
recover only gradually through the remainder of the year.
I think I agree with that sentiment as well.
It’s always important to read these kind of reports to understand the Macro Economy around you, even when you are someone like me who looks closer at the Micro-Economic conditions.
