IMF slashes out­look for Cana­dian growth

The Guardian (Charlottetown) - - BUSINESS - BY CRAIG WONG

The In­ter­na­tional Mon­e­tary Fund has slashed its out­look for Cana­dian eco­nomic growth this year while also re­duc­ing ex­pec­ta­tions for the global econ­omy.

The fund is call­ing for growth in Canada of 1.5 per cent this year, down from an April growth forecast of 2.2 per cent, the big­gest down­grade in its world eco­nomic out­look up­date is­sued Thurs­day. But growth in Canada in 2016 now is ex­pected to clock in at 2.1 per cent, up from an ear­lier forecast of 2.0 per cent.

The re­duc­tion for Canada came as the IMF cut its out­look for growth in the global econ­omy in 2015 to 3.3 per cent from the 3.5 per cent it pre­dicted in April, cit­ing weak­ness in the U.S.

“The short­fall re­flected to an im­por­tant ex­tent an un­ex­pected out­put con­trac­tion in the United States, with at­ten­dant spillovers to Canada and Mexico,” the IMF said in its re­port. “One-off fac­tors, no­tably harsh win­ter weather and port clo­sures, as well as a strong down­siz­ing of cap­i­tal ex­pen­di­ture in the oil sec­tor con­trib­uted to weak­en­ing U.S. ac­tiv­ity.”

The cut by the IMF fol­lows sug­ges­tions by sev­eral econ­o­mists that Canada may have slipped into a re­ces­sion in the first half of the year and spec­u­la­tion that the Bank of Canada may cut in­ter­est rates.

CP FILE PHOTO

In­ter­na­tional Mon­e­tary Fund (IMF) Man­ag­ing Di­rec­tor Chris­tine La­garde at­tends the In­sti­tute for New Eco­nomic Think­ing Con­fer­ence on Fi­nance and Se­cu­rity at the IMF in May in Washington.

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