Contents
Tech Sector: A Beacon of Growth
Over the past years, the tech sector has truly been a powerhouse. Gains are nearing an impressive 40% for the S&P/TSX composite. In 2022, this sector climbed by nearly 69%, according to Kavcic. Such achievements remind us of the formidable growth periods of the late 1960s. For instance, during 1998-99 and 2019-20, the Nasdaq also advanced remarkably by over 30%.
Telecommunication Troubles
Conversely, the Canadian telecommunications sector has not had a similar fate. It shed more than 20%, becoming the worst-performing sector in North America. According to Kavcic, competitive pressures, considerable debt levels, and the population growth cap have all contributed to these challenges.
Economic Outlook for 2025
As we gaze into 2025, several pivotal factors come to the fore. Kavcic suggests that central banks’ rate-cutting potential and the resulting growth and earnings responses are issues of significant interest. Uncertainties on fiscal and trade fronts further add intrigue.
Tariffs and Inflation Concerns
A major worry is the imposition of significant tariffs on U.S. imports. Such a strategy would undoubtedly raise prices for American consumers. As noted by CIBC’s chief economist, Avery Shenfeld, this scenario could inflict considerable damage on the U.S. economy. The country might face retaliatory tariffs, thereby affecting its exporters and fuelling inflation.
Shenfeld points out that this inflationary surge could nudge bond yields upward. However, in a slower-growth and high-inflation environment, the economy may face stagflation.
Impacts on the Canadian Economy
In 2025, the Canadian economy might face a weaker standing relative to the U.S. Such a situation would likely drive interest rates lower. Subsequently, the loonie could weaken against the U.S. dollar, according to economists at Investment Executive.
Interest Rate Strategy
Lower interest rates could pave the way for investors seeking yields from dividend payers such as financials and pipelines. As investors hunt for returns, this trend might widen to include utilities and REITs. Ian de Verteuil suggests this could be the Canadian market’s trade focus for the upcoming year.
Potential Political Shifts
A potential win for the Conservative Party of Canada may bring a lighter regulatory hand for the energy sector. Moreover, the party’s lower tax approach might be appealing to investors.
Energy Sector Opportunities
Increased speed in project approvals could be a boon for investors in energy and resource sectors. Such changes would align favourably with the Trump administration’s deregulation policies south of the border.
Space Economy: A New Frontier
The space economy stands poised for substantial growth in the coming years. As Lazar Naiker from AGF Investments notes, its value is predicted to skyrocket from today’s US$630 billion to US$1.8 trillion by 2035, according to the AGF perspective. More commercial interests are driving innovations in space exploration. For instance, reusable rocket components are reshaping launch technologies.
Satellite Advancements
The number of satellites orbiting our planet is increasing. These satellites undertake diverse roles, catering to both defence and civil applications. Communication and earth-observation satellites are enhancing industries through better broadband access and improved logistics management.
Naiker remarks on the expansive possibilities within the space economy. From infrastructure to specific industries, the evolution ahead appears promising. As our capabilities expand, so will the industries empowered by these advancements.
