Paul Martin's Business Update - June 12th, 2014

Paul Martin's Business Update - June 12th, 2014

There’s nothing like a boomer of a crop to create the impression that the economy is slowing.

The Royal Bank’s economics unit has just released its updated quarterly forecast for the provincial economy and the highlight is a downward revision. They now suggest the economy will expand by 1.4 per cent this year, not the 2.0 per cent expected three months ago.

The reason for the revision? Last year’s crop.

We all know it was big – a record by quite a distance. And now that the tallying is done, it turns out the crop had a more positive impact on the economy than originally expected. We grew almost five per cent last year, about a point-and-a-half higher than anticipated.

Now we’re moving above that higher-than-expected level but growth will be slower this year…but from a higher starting point with another 3 per cent expected next year.

The headline says we’re slowing but actually nothing’s changed. Looking at it over 24 months, the front half was stronger than expected and the back half weaker…so on average, no change.

www.martincharlton.ca #crop #rbc #forecasting