At this point, it appears that the U.S. will outperform Canada in 2017. This wouldn’t really be a result of Trump’s policies, where the main impact will be felt in 2018. It’s really due to the weakness of the Canadian economy. While energy prices are likely to rise a bit (see below), the main bene t will be to energy company profits as opposed to real production and investment activity. The oil sector needs higher and stable oil prices to start drilling again.
In addition, the rotation from energy to non-energy export activity in Canada will take longer than expected. This is due to capacity constraints as well as reduced demand from the U.S. manufacturing sector as it adjusts to the ongoing strength of the American dollar. At the same time, it’s reasonable to expect another solid year from American consumers, given still elevated pent-up demand and higher wage growth as labour market activity remains strong. We expect GDP growth in Canada to average 1.7% in 2017 versus an average of 2.2% in the US. In Canada, we expect B.C. and Ontario to lead the way.