The parliamentary budget office says economic growth will remain sluggish over the next couple of years, but that won't keep the federal government from hitting its balanced budget target in 2015.
In its latest report, the office predicts that the economy will grow by two per cent in the second half of this year, with a 1.6 per cent increase for the year overall.
It forecasts two per cent growth in 2014 and 2.6 per cent in 2015.
Beyond that, it predicts growth to average 2.0 per cent in the 2016-18 period.
It says this near-term weakness likely will lead to a modest increase in unemployment, which was at 6.9 per cent in September.
The report says the Bank of Canada is likely to keep its key interest rate at one per cent through the first quarter of 2015.