IMF slashes outlook for Canadian growth
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.