“While the federal government’s upcoming budget will seek to hasten the recovery, it is the US bailout that, when combined with Canadian relief efforts, will wake the economy out of its sleep,” said Joe Brusuelas, chief economist at RSM US LLP. “Payments sent direct to Americans will trigger consumer spending, which in turn will lead to robust expansion this year and next. Canada’s economy will benefit from this. “
Railroad is a metaphor
The recent contract with the Canadian Pacific Railway is a metaphor for the new era of political cooperation. The report paves the way for an integrated continental economy.
Several Canadian industries are expected to benefit, including automobiles, manufacturing, and agriculture, while an increase in oil-by-rail transport from Canada to the US in 2021 is likely due to the higher energy needs of a stronger US economy and the failure of the Keystone XL pipeline.
However, that alone will not provide the spark needed for the Canadian economy.
“Canadian Pacific’s $ 25 billion deal to purchase Kansas City Southern is a significant step in easing tension between North American trading partners this year and realizing the vision of an integrated North American economy,” said Alex Kotsopoulos, partner , Projects and Economy at RSM Canada. “In the short term, however, the current unemployment in Canada [7.5%] point to a labor market struggling to regain its full potential amid current local government revenue shortages and Canada’s output gap [-5.1%] – defined as the difference between actual GDP and pre-pandemic forecast GDP of the economy – suggests that the government needs more action. “