The central bank's latest monetary policy overview of global and domestic conditions suggests Canada is a victim of global problems, but also that it has more than a few home-grown problems keeping growth below par.
In raw numbers, the bank expects economic growth will slow to 2.1 per cent this year from 2.4 per cent in 2011, and only advance by a still moderate 2.3 per cent and 2.5 per cent in 2013 and 2014.
Those numbers were released Tuesday when the central bank decided to keep its benchmark interest rate unchanged. Wednesday's paper adds flesh to the bones, showing just how disappointing the year will be. The bank says each of the next four quarters will be weaker than it predicted in its last report in April.
For the yet to be reported second quarter, which ended in June, the bank expects the economy likely only grew by 1.8 per cent, seven-tenths of a point slower than it thought would be the case in April. The subsequent three quarters will also produce modest results of 2.0, 2.3 and 2.3, the bank says.
The bank does not forecast employment, but the macro growth numbers suggest that job creation will be modest the rest of 2012.
"This outlook for the Canadian economy is weaker over the near term than anticipated," the bank report states.
"As a result, the Canadian economy is expected to continue to operate with a small amount of slack for somewhat longer than previously anticipated," and will not return to full capacity until the second half of next year.
Looking at the economy by sectors, the bank says business investment and consumer spending, supported by super-low interest rates, remain the chief support systems for the recovery.
Even so, both will contribute less to growth than previously projected. Consumer credit continues to slow, but remains above income growth. Business investment will also be less robust than expected due to concerns about the global economy.
Meanwhile, housing activity is slowing thanks in part to government action to toughen mortgage rules, government austerity is acting as a drag, and exports remain subdued.
The bank sees Canada's export performance as perhaps the key weakness in the overall economic performance, devoting a special section to the subject.
Simply, Canada has not taken advantage of spectacular growth in emerging market economies to boost sales, a surprising development given that the country is blessed with an abundance of the natural resources the world needs.
Canada's global market share of goods exports has actually declined in recent years, from a peak of 4.5 per cent in 2000 to 2.7 per cent in 2010, the bank notes, and exports overall have yet to recover to the pre-recession level.
"While Canadian firms have been facing competitiveness challenges resulting from the persistent strength of the Canadian dollar and poor productivity performance relative to major trade competitors, other factors, such as to whom Canada sells its products and the products it sells, have also significantly affected the performance," it argues.
As laboured as Canada's recovery is, the global outlook is far worse, the bank says, with Europe likely to remain in recession throughout 2012, U.S. growth moderating to below Canada's pace, and even the fast growing emerging economies hitting a few speed bumps. China, the world's second largest economy, is expected to see growth of 7.8 per cent this year, strong by most standards, but significantly weaker than last year's 9.3.
Overall, the bank predicts the global economy will expand by 3.1 per cent this year and next, seven-tenths of a point below last year's pace.
While a sombre report overall, the bank points out that the assumptions are based on a rather optimistic assumption.
"In particular, the bank's projection assumes that authorities in Europe are able to contain the ongoing crisis, although the assumption is clearly subject to downside risks," it cautions.