With improving employment, strengthened housing starts and a rise in energy investment, the RBC Economic Outlook forecasts that the Canadian gross domestic product (GDP) will grow by two per cent in 2017. In 2018, GDP growth should reach 2.1 per cent, anticipates the report released March 10.

Canadian exports are expected to see a slight increase, while consumer activity is expected to keep supporting growth.

Threat of protectionist trade policies

"Economic conditions, including a pickup in U.S. business investment and modest U.S. export growth, are likely to bolster Canadian exports,” says senior vice-president and chief economist at RBC, Craig Wright. “But the threat of protectionist trade policies has the potential to hurt Canada's small, open economy."

The federal government’s plan to spend on infrastructure over the next year is expected to add about half a percentage point to economic growth in Canada. However, less activity in real-estate could slow growth, with high prices and new legislation cooling some overheated markets.

Dollar is expected to depreciate in value

The Canadian dollar is expected to depreciate in value against the US dollar as the Federal Reserve intends to raise interest rates throughout the year. The Canadian dollar is expected to go down to 72.5 US cents in 2017, but should rise to 75.2 US cents by the end of 2018, RBC anticipates.

For the provinces, general growth is expected, particularly for Ontario with a growth rate of 2.5 per cent. Alberta and Saskatchewan will see growth after two years of decline. The Maritime provinces are expected to see modest growth. However, a decline is anticipated for Newfoundland and Labrador (-3.6 per cent).