Expert says Canadian economy will improve in 2021, though 'not spectacularly'

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TORONTO -- After a tumultuous 2020, those with their eyes on the Canadian and global economies can expect improvements in 2021, according to one expert.

"I actually think the economy is going to do very well in 2021," Ian Lee, an associate professor at Carleton University's Sprott School of Business, told CTV News Channel on Friday. "Not spectacularly, but much better than in 2020."

Lee attributes this in part to Canadians' saving rate in 2020, which he said has "gone through the roof."

Lockdown measures to prevent the spread of COVID-19 meant that those with disposable income had less to spend it on. Statistics Canada reports that after the first quarter of 2020, Canadians saved an average of 7.6 per cent of disposable income, up from 2.3 per cent in the first quarter of 2019.

But by the second quarter of 2020, Canadians were saving 28.2 per cent, a dramatic increase from the 3.1 per cent they were saving in 2019's second quarter.

"I cannot remember it being this high," Lee said.

With vaccines being rolled out in 2021, Lee said there is renewed hope that Canadians will soon be able to leave their homes and make the kinds of purchases that will stimulate the economy.

"I think we're going to see a very significant increase in spending because people are going to be so grateful and so happy it's behind us," he said. "We can get out of our houses, go to restaurants, go out flying and travelling and so forth. So I think we'll see that pent-up demand express itself in 2021."