Solid growth, but hardly a boom.
The Canadian economy will grow by 3.2 per cent in 2011, or a notch better than the expected 3.1 per cent pace this year, according to the Royal Bank of Canada's latest forecast. The bank expects growth to fall back to 3.1 per cent in 2012.
RBC chief economist Craig Wright pointed out that the expected expansion of gross domestic product in 2010 and 2011 would mark the fastest pace of growth in four years for Canada.
"Financial conditions remain supportive of domestic growth, which will be the main engine of growth going forward," Mr. Wright said.
RBC says the U.S. will grow 2.7 per cent this year, 3.3 per cent next year and 3.6 per cent as U.S. businesses and consumers start spending again.
RBC expects the euro zone to recover even more slowly, growing 1.7 per cent this year, 1.8 per cent in 2011 and 1.9 per cent in 2012.
The forecasts suggests a reversal of positions for Canada and the United States in 2011. While the U.S. suffered a much deeper slump, Canada's recovery may take a lot longer.
For Canada, the bounce back from the recession of 2008-2009 has been much less dramatic than in previous slumps.
And that means the unemployment rate, currently at 7.6 per cent, will come down only gradually. RBC is forecasting a jobless rate of 7.4 per cent at the end of 2011 and 7 per cent at the end of 2012.
The Canadian dollar is likely to remain near parity in 2011 and beyond, RBC said. That's likely to continue to slam Canadian exports and boost imports, which in turn will put a drag on economic growth.
RBC also ranks the provinces in growth rates. And it's looking for Saskatchewan and Newfoundland to lead the way in 2011, with Alberta a close third.