RBC Financial Performance Update
2021 Economic Outlook
Projected Economic Indicators for 2021 (1)
GDP Growth
Inflation
Unemployment
Rate
Interest Rate
(3 mth T-bills)
Current Account
Balance/GDP (2)
Budget
Surplus/GDP (3)
Canada
6.3
1.9%
7.4%
0.20%
0.2%
(7.8%)
U.S.
6.2
2.7%
5.4%
0.25%
(3.5%)
(15%)
Euro Area
4.1
1.6%
8.5%
NA
2.8%
(6.7)
Canada
U.S.
Euro Area
The Canadian economy is forecast to rebound 6.3% in 2021 following a 5.4% drop in 2020. GDP retraced almost 90% of
the unprecedented 18% decline over March and April as of February 2021, but was still over 2% below year-ago levels in
that month.
Remaining economic weakness is disproportionately concentrated in the travel and hospitality sectors, where activity
continues to be curbed by virus containment measures. Household disposable incomes have been propped up by
government support for those unemployed and interest rates remain low. Renewed virus spread will slow the pace of
recovery in Q2 2021 but is expected to strengthen over the second half of the year as vaccination rates ramp up and
containment measures are eased.
The U.S. economy is expected to grow 6.2% in 2021 after a 3.5% decline in 2020. The pace of recovery is strengthening
as vaccine distribution ramps up and containment measures ease.
The unemployment rate is expected to average 5.4% in 2021, still well-above pre-shock levels but much lower than the
8.1% average in 2020.
The economy's recovery will be boosted as containment measures ease and by very large fiscal stimulus supports that
have boosted household incomes and savings through the pandemic.
As in other regions, Euro area economies have partially recovered from unprecedented declines in the second quarter of
2020. Virus spread and containment measures continue to weigh on activity but vaccine distribution is ramping up.
Growth in both the Euro area and the U.K. economies is expected to strengthen in Q2 2021 and over the second half of
this year as virus spread and containment measures ease.
(1) RBC Economics Research as of April 9, 2021 and reflect forecasts for calendar 2021. (2) RBC Economics Research, IMF WEO (April, 2021). (3) IMF WEO (April 2021)
43 | ECONOMIC BACKDROP
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