As the new year is already underway, many businesses are wondering what’s in store for 2017. Industry pundits from all spectrums are also speculating the future. The Larouche team recently took part in a conference, which was held by the Chambre de commerce et industrie de Québec, on the economic and political climate that will reign in the upcoming year. The analysts, including Matthieu Arseneau from the National Bank of Canada, Jean-Pierre Lessard from Aviseo Conseil, and journalists Michel Hébert and Michel Girard were on hand to share their viewpoints and predictions for 2017. We took stock of their opinions, combined with forecasts from other experts, to give our readers an overview on what they need to consider for the ensuing months. 

Canada

“When the economy experiences a downturn, it impacts the investments at all levels of governments make,” explained Matthieu Arseneau. In 2017, because the Canadian economy is stronger than last year, economists predict minimal changes to government investments. In addition, the US economy seems to be on the upswing, which greatly encourages Canadian businesses. 

However, because average incomes have increased and unemployment rates are at all-time lows, the government will most probably decrease spending, which will entail an increase in interest rates. A hike in the Bank of Canada’s interest rates may very well slow down the economy.

According to economist Clément Gignac, the recent American election has caused heightened economic uncertainty, particularly for companies and their financial projections. His advice to the Canadian government: set up special provisions to counter the level of uncertainty in Canada and stimulate the local economy.

For the manufacturing industry, Mr. Gignac remains adamant that despite the election of Donald Trump, the economic outlook looks bright and exports are most likely to increase. However, if President-elect Trump decides to instill a Buy American policy, Canada’s manufacturing industry will be negatively affected.

Quebec  

Mr. Jean-Pierre Lessard, from Aviseo Conseil, reminded attendees that in 2016, the provincial government succeeded in restoring public finances thanks to major decreases in spending and other austerity measures. Taxpayers bore the brunt of this fiscal policy. For the upcoming budget, Mr. Lessard predicts an increase in spending in health and education. He does not believe that income tax increases are likely, due to the current government’s strategy to create closer ties with its citizens.

Mr. Lessard also indicated that Québec must “adapt to a new economic world.” The province’s economic growth is weak, due in part because the population is aging, which minimizes the number of qualified workers. 

However, economic growth nevertheless looks promising for the province. In fact, many workers from Ontario are migrating to Québec in order to work. This phenomena, according to Mr. Lessard, may be caused by issues Ontario entrepreneurs have to start up or obtain investments for their new ventures.

The government reached a surplus of $3.7 billion in 2015-2016—and it continues to increase in 2016-2017. This surplus will be reinvested in education and healthcare. Provincial elections are just around the corner in 2018; the Québec government will most likely invest even more heavily. Moreover, these investments will enable the federal government to heavily invest in infrastructure projects and inject additional sums in provinces’ regional economic and tourism development. It appears that an additional $200 million will be attributed to these initiatives each year.

Industry 4.0 is a hot topic in the manufacturing sector. The government is relying heavily on growth in this sector. We can therefore assume that subsidies will be granted for technological innovation and development.

The American presidency

As we have all become increasingly aware, global populations are very concerned with the election of Donald Trump. Analysts during the conference reassured attendees that all was not doom and gloom. 

Although Trump’s protectionist measures may be a cause for concern for many companies, economists agree that Canada and Québec will most probably be spared. In fact, as journalist Michel Girard pointed out, US imports from Canada hover at $296 billion and US exports, at $280 billion. In other words, the US and Canada are almost on par. If the US decides to impose trade tariffs, Canada could, in turn, impose tariffs as well, causing a no-win situation. It’s also important to remember that Canada only represents 2% of the US’s trade deficit.

In sum, despite the concerns and risks, 2017 appears to be a year of stability and profitability. Growth is expected in Canada and Québec remains in a solid position despite its challenges with respect to entrepreneurial development. 

Opportunities for businesses

Québec and Canada’s current economic climate bodes well for the future: the economies of both the province and country as a whole should continue to thrive.

This means that more investments will likely be made in many different industries, which should incite the creation of new companies, products, projects and jobs.

Advances in technology will change the way consumers research, shop for and buy products. In addition, the sharing economy will turn traditional business models upside down. Case in point: only two years ago, Uber was only an idea. Today, it is forcing governments around the world to create new regulations. Urban planners, real estate developers and cities must look into developing or changing zoning laws to take into account the unprecedented popularity of AirBnB.

All of these budding new opportunities are also profoundly changing the socio-economic fabric of our time as well as impacting your markets, clients and products. Whether you are looking to obtain grants or grow organically, these new investments will no doubt help you to optimize and growth your business for the years to come.

By keeping abreast of these new economic opportunities, you’ll be able to ensure your company’s long-term profitability. 

And we’ll be with you every step of the way for your business goals!  

Happy 2017!

Sources

Conférence sur les perspectives économiques et politiques 2017. Chambre de commerce et d’industrie de Québe. 17 janvier 2017.

Gignac, Clément. Des conseil pour le prochain budget : Entrevue avec Clément Gignac économiste. Radio-Canada dans Première Heure. http://ici.radio-canada.ca/emissions/premiere_heure/2015-2016/chronique.asp?idChronique=426562. 16 janvier 2017.

Desjardins. Prévisions économiques et financières : 2017 un point tournant?. https://www.desjardins.com/ressources/pdf/peft1612-f.pdf?resVer=1481897325000. 16 décembre 2016.

Fillion, Gérald. Ceci n’est pas une prévision pour 2017. Radio-Canada. http://ici.radio-canada.ca/nouvelle/1007561/ceci-est-pas-une-prevision-fillion-trump-alena. 23 décembre 2016.

Radio-Canada. Mise à jour économique du Québec : de l’argent frais pour l’éducation et la santé. http://ici.radio-canada.ca/nouvelle/810802/mise-jour-economique-ministre-finances-leitao-quebec. 25 octobre 2016.

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