SARS, the BSE case, and a strong CAD have lowered growth this year. Retail sales held up reasonably well given the SARS problem, but declining auto sales are lowering growth. The labor market has weakened. The strong Canadian dollar will hurt job growth going forward.
Inflation has come down as oil prices have fallen. The housing market has peaked, but lower interest rates should prop up activity through a few weak quarters. The BSE-related export ban will lower output by about 0.2% this year.
Inflation has fallen recently, and will likely remain low for the rest of the year. Despite recent economic difficulties, the Bank of Canada (BoC) will not cut rates.
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