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CANADA: Macklem Refers To Bleak Tariff Forecast When Pressed

CANADA
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Governor Macklem pointed to the July 2019 MPR appendix after being asked multiple times on potential tariff disruption, although as he was clear to point out there are still many unknowns at this stage. This appendix included a downside scenario where the US imposes 25% tariffs on all imports (rather than just Canada for example). 

  • “By the end of 2021, the level of global GDP is approximately 3 percent lower than in the base-case projection, while commodity prices are roughly 30 percent weaker. These developments reduce Canada’s terms of trade, which reinforces the global downturn and the supply and demand channels, generating an overall decline of about 6 percent in Canadian GDP."
  • “The Canadian dollar depreciates by roughly 25 percent relative to the base case.”
  • “The peak impact on year-over-year CPI inflation is about 3 percentage points and occurs after about 1 year.”
  • The BoC will be revising its economic projections for the January MPR. 

 

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Governor Macklem pointed to the July 2019 MPR appendix after being asked multiple times on potential tariff disruption, although as he was clear to point out there are still many unknowns at this stage. This appendix included a downside scenario where the US imposes 25% tariffs on all imports (rather than just Canada for example). 

  • “By the end of 2021, the level of global GDP is approximately 3 percent lower than in the base-case projection, while commodity prices are roughly 30 percent weaker. These developments reduce Canada’s terms of trade, which reinforces the global downturn and the supply and demand channels, generating an overall decline of about 6 percent in Canadian GDP."
  • “The Canadian dollar depreciates by roughly 25 percent relative to the base case.”
  • “The peak impact on year-over-year CPI inflation is about 3 percentage points and occurs after about 1 year.”
  • The BoC will be revising its economic projections for the January MPR.