Results of the Department of Finance’s Private Sector Economic Survey for December 2010

StarBuzz Weekly, Toronto-The Department of Finance regularly surveys private sector forecasters for their views on the Canadian economy. The average of private sector forecasts forms the basis for the economic assumptions used for fiscal planning purposes in the budget and the fall update. The use of the average private sector forecast introduces an element of independence into the Government’s economic and fiscal forecast.


In December 2010, the Department of Finance surveyed private sector forecasters for their updated views on the Canadian economy. All 15 forecasters surveyed responded with their updated economic forecasts. 
The December 2010 survey of private sector forecasters includes the following forecasters: Bank of America Merrill Lynch, BMO Capital Markets, Caisse de dépôt et placement du Québec, CIBC World Markets, The Conference Board of Canada, Desjardins, Deutsche Bank of Canada, IHS Global Insight, Laurentian Bank Securities, National Bank Financial, Royal Bank of Canada, Scotiabank, TD Bank Financial Group, UBS Securities Canada, and the University of Toronto (Policy and Economic Analysis Program).

The results of the December 2010 survey, as well as the September 2010 survey results published in the October 2010 Update of Economic and Fiscal Projections, are presented in Table 1.

The economic outlook in the December survey is broadly consistent with the September survey.

Real gross domestic product (GDP) growth is expected to be somewhat lower in 2010 and 2011. In contrast, GDP inflation is expected to be somewhat higher in those years. As a result, the outlook for nominal GDP in 2010 and 2011 is virtually unchanged. The outlook for nominal GDP has improved somewhat over 2013–2015, reflecting higher expected GDP inflation.

Private sector forecasts for the unemployment rate and interest rates in the December survey are by and large unchanged from the September survey.


   
Table 1: Evolution of the Average Private Sector Economic Forecast
2010
2011
2012
2013
2014
2015
2010-2015
Real GDP Growth (%)
   September 2010 survey
3.0
2.5
2.8
2.9
2.6
2.5
2.7
   December 2010 survey
2.9
2.4
2.8
2.9
2.6
2.5
2.7
GDP Inflation (%)
   September 2010 survey
2.8
2.0
2.3
2.0
2.0
1.9
2.2
   December 2010 survey
2.9
2.2
2.3
2.1
2.1
2.1
2.3
Nominal GDP Growth (%)
   September 2010 survey
5.9
4.6
5.2
5.0
4.6
4.4
4.9
   December 2010 survey
5.9
4.7
5.2
5.1
4.8
4.7
5.0
Nominal GDP Level ($ billions)
   September 2010 survey
1,618
1,692
1,780
1,868
1,954
2,039
--
   December 2010 survey
1,618
1,693
1,780
1,870
1,959
2,050
--
     Difference (Dec - Sept)
0
1
1
2
6
11
--
   Update 2010 fiscal planning assumption
1,616
1,682
1,770
1,861
1,949
2,034
--
     Difference (Dec - Fiscal Planning)
2
11
11
10
11
16
--
3-month Treasury Bill Rate (%)
   September 2010 survey
0.6
1.6
2.7
3.5
4.0
4.0
2.7
   December 2010 survey
0.6
1.4
2.6
3.6
4.0
4.0
2.7
10-Year Government Bond Rate (%)
   September 2010 survey
3.2
3.3
4.0
4.6
4.8
4.9
4.1
   December 2010 survey
3.2