Al­berta wild­fires put econ­omy in re­verse

The Hamilton Spectator - - BUSINESS - ANDY BLATCH­FORD

OTTAWA — The Bank of Canada is cut­ting its out­look for the year, say­ing the ex­ten­sive dam­age from the Al­berta wild­fires helped fuel an eco­nomic con­trac­tion in the sec­ond quar­ter.

The ef­fects of the dis­as­ter, which tem­po­rar­ily shut­tered key oil­sands fa­cil­i­ties, took hold as the na­tional econ­omy strug­gled with dis­ap­point­ing ex­ports num­bers, fee­ble busi­ness in­vest­ment and un­cer­tainty around Bri­tain’s vote to leave the Euro­pean Union.

The cen­tral bank’s fore­cast was re­leased Wed­nes­day along with its sched­uled announcement on its bench­mark in­ter­est rate, which it left at the rock-bot­tom level of 0.5 per cent, as ex­pected.

“Es­sen­tially, the un­der­ly­ing forces that sup­port a strength­en­ing of growth in Canada re­main the same, and the ad­just­ment process of the econ­omy to the lower oil prices is well un­der­way,” Carolyn Wilkins, Bank of Canada se­nior deputy gover­nor, said in French af­ter the announcement.

“That said, international and na­tional fac­tors have led us to lower our pro­jec­tions for growth in the (gross do­mes­tic prod­uct).”

The re­port also pro­vided a more-de­tailed as­sess­ment of the ef­fects of the huge Al­berta wild­fires that erupted in May, which cut oil pro­duc­tion.

The cen­tral bank es­ti­mated the fires shaved 1.1 per­cent­age points from sec­ond-quar­ter growth — as mea­sured by real GDP — and forced the econ­omy to con­tract in that pe­riod by one per cent. In April, be­fore the wild­fires, the bank had fore­cast the econ­omy would grow by one per cent.

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