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• Two out of three key provisions in Canada’s drug pricing reform have been found unconstitutional by Quebec’s Court of Appeal and are expected to be struck from implementation in July 2022.
• The upheld provision will alter the country’s reference price basket and poses significant downside risk to innovative drugmakers when enforced.

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• Low hospital capacity in Canada will remain a risk.
• Covid-19 will be the wake-up call to increase investment in healthcare infrastructure.
• Fiscal pressures will pose a risk on the overall government spending.

Low hospital capacity in Canada will remain a risk. Despite spending more on healthcare than most other developed

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• Canada’s economic recovery from the Covid-19 pandemic will likely strengthen throughout H221 and into 2022 as an improving labour market drives private consumption and investment rebounds.
• At Fitch Solutions, we revised our 2021 growth forecast to 5.9%, from 6.1% previously, following Q221's seasonally adjusted real GDP print

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• Ports will be a major target of infrastructure investment in Canada over the coming years, with multiple ports in the country to see major expansion projects undertaken.
• The port of Prince Rupert is set to remain a key focus of port investment in the country, as port officials looks to further strengthen the port’s position and

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• Alcoholic drinks spending in Canada will begin to recover from 2021, after a tough 2020, impacted by Covid-19 related restrictions, which significantly disrupted the sector.
• Over the medium term (2021-2025), we forecast alcoholic drinks consumption growth to remain strong, with wine posting the fastest growth.
• A key driver

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• We at Fitch Solutions continue to expect Bank of Canada (BoC) to keep its benchmark policy rate on hold at 0.25% through to 2023 and to continue its quantitative easing programme as inflation is unlikely to return sustainably to the 2.0% target before 2023.

• Indeed, despite striking a more optimistic tone than in October 2020

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• We forecast light vehicle sales in Canada to return to growth of 6.9% in 2021, although volumes will remain below pre-pandemic levels.
• The passenger car segment will experience its first positive growth in nine years in 2022, as the distribution of a Covid-19 vaccine supports the tourism sector and, by extension, rental car demand.

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• The impact of Covid-19 will mean that Canada's economic recovery will remain muted over the forecast period (2020-2024). We note that household disposable incomes will feel the pressure as a consequence of a protracted economic recovery, with real wages forecast to record limited gains over 2020-2024, making consumers more price

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• Recent developments underpin our outlook that public transit infrastructure construction will be a key driver of infrastructure investment overall in Canada over the coming years, supported by robust government support for the sector.
• We expect Ontario to be a particularly strong focus of investment in public transit, driven by the