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Potential Growth Revised Lower, Neutral Rate Estimate Unchanged

CANADA
  • Downward revisions to potential output growth vs Apr’22: Now seen increasing from 1.4% in 2022 to 2.3% (-1pp) in 2023 and stabilizing around 2% over 23-26 (-0.3pps vs 24-25 av).
  • Negative revisions from weaker business invt and larger impact from global supply disruptions, partially offset by projected immigration.
  • Unchanged nominal neutral rate of interest at 2-3% (mid-point 2% target plus 0.5% real rate) as on balance expected.

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