During 1983 the economy has regained some of its lost vigour by means of increased consumer spending, the end of a rundown of business inventories, and some job creation. However, according to most observers, the long-term outlook is not cheerful.
In its latest forecast for the period 1983-88, the Conference Board of Canada predicts that inflation and large government deficits will keep interest rates high which will in turn curb consumer spending and business investment. Average weekly wages will not move ahead of inflation, and the economy will grow at an average annual rate of two per cent.
The U.S.-based National Association of Business Economists last week made similar predictions, including a stagnant GNP rate for 1985 and 1986, and also named high interest rates as the cause.