North America: Canada to suffer more than the US – BMO

Events are unfolding much more rapidly and intensely than previously expected, bringing the economic weakness forward. Analysts at BMO Economics are adjusting North American forecasts for 2020 yet again this week. 

Key quotes

“US GDP is expected to contract moderately in Q1, and then fall at a 10% annual rate in Q2. We continue to expect a strong rebound in H2, but the entire year will likely see a 0.5% drop.”

“Canada’s GDP growth is being cut to -1.0% this year, down a full point from last week’s call of zero. We expect a big Q2 contraction (down 10%) after a 2.5% drop in Q1, but also a big rebound in H2.”

“We don’t expect any further moves on the U.S. rate front right out to the end of 2021.”

“The Bank of Canada’s Governor Poloz gave a pass on a prime-time opportunity last week to cut again after last Friday’s 50 bp chop. We still look for another 50 bp cut down to the crisis low of 0.25%, but it may well not happen until the mid-April meeting.”