The recovery is over in Canada and the country has entered a new expansion phase.
Despite a relatively enviable position, Canada's economy will have to deal with a number of challenges. These include the winding down of government stimulus plans, budget cuts, as well as a currency whose high value is still hurting exports.
Interest rate increases in the second half of the year will also impact the real estate market and consumption negatively. Businesses should continue to invest, however.
"Economic growth has been revised from three per cent to 2.9 per cent for 2011 due to temporary weakness this spring; for 2012, growth is maintained at 2.7 per cent," said Yves St-Maurice, director and deputy chief economist at Desjardins Group.
Western provinces and Newfoundland and Labrador are currently benefiting from high oil prices. British Columbia could get a boost towards the end of this year and in 2012 from the reconstruction efforts in Japan.
Ontario will benefit from a strong comeback by the auto sector, even though, in the near term, the province will be hurt by the supply problems with Japanese plants.
Consumer spending did worse in Québec than in most regions in Canada early this year, probably due to the one per cent increase to the Québec sales tax (QST) in January.