The United Nations (UN) expects Canada‘s economy to expand 4% in 2022, supported by the lifting of Covid-19 restrictions, the release of pent-up demand of exports.
In response to high inflation, the Bank of Canada will continue to raise its official interest rate in the coming months, leading to a weakening in domestic demand and an expected moderation in growth to 2.8% in 2023.
In the first quarter of 2022, imports from this nation were 163,772 million Canadian dollars, a year-on-year increase of 15.4%, according to Statistics Canada.
Conversely, its exports were 176,765 million Canadian dollars, a growth of 20.4% at the annual rate.
On the other hand, the UN projects that the US GDP will grow 2.6% in 2022 and 1.8% in 2023, which marks a significant downward revision of our previous forecast published in January 2022.
Stubbornly high inflation, aggressive monetary tightening by the Federal Reserve and fallout from the war in Ukraine will continue to weigh on growth, while a strong dollar, a direct consequence of monetary tightening, will help further widen trade deficits and reduce growth in 2022.
In the United States, the unemployment rate fell to 3.6% in March, only slightly above the 50-year low recorded in February 2020, and the number of vacancies remained near an all-time high.
However, the total employment and labor force participation rate is still below pre-pandemic levels.
Consumer price inflation, which jumped to a four-decade high of 8.5% in March, presents the key policy challenge for the United States.
At the same time, the war in Ukraine has further pushed up energy and food prices and exacerbated supply constraints amid strong consumer demand.
In addition, according to the UN, the widespread and persistent shortage of workers has fueled wage growth.
With price pressures expected to slowly ease, the UN estimates annual inflation to average 7% in 2022, before slowing to around 4% in 2023.
Against the backdrop of an increasingly tight labor market and high inflation, the Federal Reserve is expected to aggressively pursue monetary tightening in 2022, with a view to ensuring a soft landing for the economy.