The Conference Board of Canada expects the Canadian economy to grow by 1.9% in 2019, easing from an expected 2.1% gain this year.

Canada’s economy faces headwinds on several fronts, according to The Conference Board of Canada. Consumer spending will be restrained by a combination of weaker employment and wage growth, high debt loads, and rising interest rates. Meanwhile, the drop in oil prices and lack of pipeline capacity will continue to constrain investment in Canada’s energy sector. Government spending is also expected to slow due to rising fiscal deficits.

“Canada’s economy is facing a few challenges heading into 2019,” said Matthew Stewart, director, national forecast, at The Conference Board of Canada. “Consumer spending has been driving economic growth over the last several years, but Canadians are tightening their purse strings. Economic growth in 2019 will depend on improved business investment and a better performance from the nonenergy trade sector.”

While job growth has picked up in recent months, overall employment growth in 2018 was modest, according to the forecast. A factor behind the sluggish employment growth has been rising retirements, as many baby boomers continue to exit the labor market. This has led to labor shortages across many industries in Canada with the unemployment rate hitting a record low of 5.6% in November. Wage growth remains weak but should begin to pick up in 2019 as firms compete for a limited number of workers in the tight labor market.