Potential Output in Canada: 2018 Reassessment

Andrew Agopsowicz, Dany Brouillette, Bassirou Gueye, Julien McDonald-Guimond, Jeffrey Mollins and Youngmin Park

No 2018-10, Staff Analytical Notes from Bank of Canada

Abstract: This note summarizes the reassessment of potential output, conducted by the Bank of Canada for the April 2018 Monetary Policy Report. Overall, the profile for potential output growth is expected to remain flat at 1.8 per cent between 2018 and 2020 and 1.9 per cent in 2021. While population aging will continue to be a drag on potential output growth, this drag is expected to be offset by a pickup in trend labour productivity. This year’s profile represents a substantial revision relative to the April 2017 reassessment. This is mostly a result of the historical revisions to the levels of business investment and capital stock released in November 2017 by Statistics Canada, strong employment gains in 2017 and a slightly more optimistic outlook for investment over the projection horizon. An analysis of alternative scenarios suggests a range for potential output growth from ±0.3 percentage points in 2018 to ±0.6 percentage points in 2021.

Keywords: Labour markets; Potential output; Productivity (search for similar items in EconPapers)
JEL-codes: E E00 E2 E22 E23 E24 E37 E6 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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