Because of Oil.
Canada’s 2015 Economic Growth Forecast Downgraded by OECD - WSJ
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TORONTO—The Organization for Economic Cooperation and Development has downgraded its forecast for growth in Canada for the second time this year and now expects its economy to grow by about 1.5% this year, as the fall in oil prices results in declines in business investment and GDP.
The research and policy-coordination group says, in its updated economic outlook for all its 34 members, it expects growth in Canada to rise to 2.3% in 2016 as exports in other sectors expand in response to the depreciation of the Canadian dollar and stronger foreign-market growth.
In March, the OECD downgraded its growth forecast for Canada in 2015 to 2.2%, from 2.6% in November 2014. Its new 2.3% forecast for 2016 is slightly higher than its 2.1% forecast in March.
Oil is Canada’s biggest export, and the fall in global oil prices has had a substantial negative impact on its economy. Statistics Canada reported on Friday that Canada’s gross domestic product declined by 0.6% in the first quarter.
The Bank of Canada and the country’s federal government have taken the view the economy will rebound in the second half of the year, helped by increasing demand from the U.S. for Canadian exports and increased consumer spending in response to lower gasoline prices.
The OECD expects, as does Canada’s central bank, that a shift toward non-energy exports will support a subsequent strengthening in business investment.
It also sees Canada’s heavily indebted consumers continuing to make a contribution to growth. “Following recent weather-related weakness, consumption growth should pick up,” the OCED says.
The OECD says high household debt and house prices pose financial-stability risks, and further macroprudential measures, such as tightening of mortgage borrowing rules may be required should these risks increase.
It expects the Bank of Canada will begin raising interest rates in early 2016 to counter inflationary pressures. Canada’s consumer-price index was at 0.8% on an annual basis in April, below the Bank’s 2% target. Core inflation was at 2.3%.
The OECD says business investment stands in Canada above prerecession levels, but that partly reflects the expansion of the oil and gas sector in recent years.
“[Investment] plans have been pared back with the fall in oil prices,” it says.
Canada’s 2015 Economic Growth Forecast Downgraded by OECD - WSJ
Canada’s 2015 Economic Growth Forecast Downgraded by OECD - WSJ
The Wall Street Journal & Breaking News, Business, Financial and Economic News, World News and Video
TORONTO—The Organization for Economic Cooperation and Development has downgraded its forecast for growth in Canada for the second time this year and now expects its economy to grow by about 1.5% this year, as the fall in oil prices results in declines in business investment and GDP.
The research and policy-coordination group says, in its updated economic outlook for all its 34 members, it expects growth in Canada to rise to 2.3% in 2016 as exports in other sectors expand in response to the depreciation of the Canadian dollar and stronger foreign-market growth.
In March, the OECD downgraded its growth forecast for Canada in 2015 to 2.2%, from 2.6% in November 2014. Its new 2.3% forecast for 2016 is slightly higher than its 2.1% forecast in March.
Oil is Canada’s biggest export, and the fall in global oil prices has had a substantial negative impact on its economy. Statistics Canada reported on Friday that Canada’s gross domestic product declined by 0.6% in the first quarter.
The Bank of Canada and the country’s federal government have taken the view the economy will rebound in the second half of the year, helped by increasing demand from the U.S. for Canadian exports and increased consumer spending in response to lower gasoline prices.
The OECD expects, as does Canada’s central bank, that a shift toward non-energy exports will support a subsequent strengthening in business investment.
It also sees Canada’s heavily indebted consumers continuing to make a contribution to growth. “Following recent weather-related weakness, consumption growth should pick up,” the OCED says.
The OECD says high household debt and house prices pose financial-stability risks, and further macroprudential measures, such as tightening of mortgage borrowing rules may be required should these risks increase.
It expects the Bank of Canada will begin raising interest rates in early 2016 to counter inflationary pressures. Canada’s consumer-price index was at 0.8% on an annual basis in April, below the Bank’s 2% target. Core inflation was at 2.3%.
The OECD says business investment stands in Canada above prerecession levels, but that partly reflects the expansion of the oil and gas sector in recent years.
“[Investment] plans have been pared back with the fall in oil prices,” it says.
Canada’s 2015 Economic Growth Forecast Downgraded by OECD - WSJ
