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Banking on Main Street: Canadian Economy and Business Activity Poised for a Comeback

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  • New flagship research publication, Banking on Main Street, combines expertise of BMO Economics with BMO bankers' insights on business conditions

  • Economy expected to grow 6 per cent this year, 4.5 per cent in 2022

TORONTO, Aug. 5, 2021 /CNW/ - The Canadian economy is poised for strong growth through the second half of the year, with the easing of pandemic-related measures, and growing optimism from small businesses across the country backed by buy-local sentiment, according to a report from BMO Economics and BMO Business Banking titled Banking on Main Street: Roaring Back.

The report combines the expertise of BMO Economics with the insights of BMO's business bankers. It features a national economic report for Canada and province-by-province outlooks.

"The economy is expected to grow a solid 6.0 per cent this year, with most of the strength coming in the second half," said Doug Porter, Chief Economist, BMO Financial Group. "Monetary policy remains highly accommodative, fiscal support is still flowing, while pent-up demand for services, entertainment and travel will provide a boost from households with plenty of savings. That momentum should carry into 2022, when growth is expected to run at a still-strong 4.5 per cent."

"At BMO, we're helping our clients make real financial progress by bringing them specialized research and resources – like our new Banking on Main Street publication," said Mike Bonner, Head, Canadian Business Banking, BMO Bank of Montreal. "The last 17 months have been characterized by uncertainty for main street businesses across the country, but we're now looking at a period of opportunity. And, to seize it, it's no longer about simply opening up but about reinventing how to engage consumers and by accelerating digital efforts. We'll be standing alongside Canada's main street businesses to help and ensure that they are all on the path to recovery and growth."

Provincial forecasts at a glance:

Western Canada:

  • British Columbia is expected to grow at a strong 6.3 per cent pace this year, following a much shallower-than-average decline in 2020. Indeed, relatively mild pandemic restrictions, along with strength in resource prices and a booming real estate market, have helped the province fare among the best in Canada. Among business clients there is an underlying optimism bubbling to the surface, with clients looking to capitalize on consumers' pent up savings

  • Alberta is expected to lead the country in 2021, with a strong 7.2 per cent rebound in real GDP, led by a bounce back in oil production. Businesses in the province are starting to adopt a start-up and back-to-basics mindset in a shift towards diversification

Prairies:

  • Saskatchewan should benefit from an improved energy-price environment, with a growth rate of 5.3 per cent this year. The technology sector continues to be one to watch with upside potential for the wider economy

  • Manitoba is traditionally the most stable economy on the provincial landscape, with a diverse industry base providing a cushion. True to form, the province saw a shallower decline than the rest of Canada last year but will likely see a softer rebound of 5.4 per cent in 2021. Entrepreneurial activity is starting to pick up – on the back of a strong underlying infrastructure – and points to longer-term optimism in the province

Central Canada:

  • Ontario's economy entered the pandemic with the strongest growth trends in more than 15 years. But, with the largest urban centre and longer-lasting restrictions, the growth rebound was somewhat slower to take shape this year. That will leave growth slightly below the national average at 5.5 per cent for all of 2021. That said, torrid housing and consumer spending performances are helping, and pent-up demand for services and travel will support a very strong second-half performance, leading to above-national growth in 2022. Businesses in the province have a growing business-as-usual appetite after lockdown fatigue, with others bit by the entrepreneurial bug – particularly on the franchise side

  • Quebec was enjoying multi-decade highs for economic growth before the pandemic but has struggled heavily with COVID cases. That prompted aggressive lockdowns early on, but the recent re-opening was relatively quick. As a result, Quebec will likely outperform slightly with 6.2 per cent growth this year, and the province should remain in a position of relative strength beyond the pandemic. Government relief programs have helped provide liquidity for some businesses and let them go on the offensive and position themselves better for re-opening

Atlantic Canada:

  • Atlantic Canada fared well on the COVID front on a relative basis, but much of the regional economy was nevertheless affected. The 'Atlantic Bubble' has been a success from a health care perspective but hurt activity in a number of sectors (such as travel and tourism) that depend on flows from other regions. With the U.S. border opening in early August, some of the 2021 tourism season will be salvaged, but we expect a more complete recovery in 2022. Businesses are looking to tap into buy local sentiment and capture spend from pent-up consumers, which will help spur growth

  • Newfoundland & Labrador should see growth of 4.5 per cent this year given the improved energy-price environment. The focus on the technology sector is anticipated to help drive economic growth and attract both workers and companies to the province in the coming years and create local success stories

To view the full report, visit: https://economics.bmo.com/en/publications/detail/bdb1ddc9-e6e3-43b9-a252-1433fe845d31/.

About BMO Financial Group
Serving customers for 200 years and counting, BMO is a highly diversified financial services provider - the 8th largest bank, by assets, in North America. With total assets of $950 billion as of April 30, 2021, and a team of diverse and highly engaged employees, BMO provides a broad range of personal and commercial banking, wealth management and investment banking products and services to more than 12 million customers and conducts business through three operating groups: Personal and Commercial Banking, BMO Wealth Management and BMO Capital Markets.

Internet: www.bmo.com Twitter: @BMOMedia

SOURCE BMO Financial Group

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