Canada’s growth is tied to the worlds’ slow recovery, and slowed by the drop in oil and other commodity prices, says Aubrey Basdeo, managing director, head of fixed income at BlackRock AM Canada.
This won’t change in 2016, he adds. He forecasts that real GDP will rise by 1.5% in Canada next year. He also predicts the 10-year yield for a Government of Canada bond to be 1.8% in 2016.
The tide of money going into the market from central banks has masked regular business cycles, he argues, but in 2016, it will continue to recede. That means the business cycle’s influence on the market could begin to be apparent. But he adds “our view is clouded by the emergence of deep, structural trends” such as aging populations and new labour-saving technologies.
“The sustained levels of economic growth the world grew used to pre-crisis might not return,” he writes. “Inflation and corporate profits may well settle into a band well below historic norms.”
Read his full forecast here.