ON THE UPSWING

Forecast based on calculation that world output will grow 3.9% this year and in 2019

IMF projects Canadian economy to grow 2.3% this year, with similar forecast for 2019,

WASHINGTON— The International Monetary Fund raised its estimate for economic growth in Canada this year as it said U.S. tax cuts are expected to help boost global economic growth.

The international lending agency said Monday it now projects Canada’s economy will grow 2.3 per cent this year, up from an estimate of 2.1 per cent in October. Growth for 2019 is forecast at 2.0 per cent, up from an earlier projection for 1.7 per cent.

The update for Canada came as the IMF said world output is expected to grow 3.9 per cent this year and 3.9 per cent in 2019, up two-tenths of a percentage point in both years.

The IMF said the cyclical upswing underway since mid-2016 has continued to strengthen.

“This forecast reflects the expectation that favourable global financial conditions and strong sentiment will help maintain the recent acceleration in demand, especially in investment, with a noticeable impact on growth in economies with large exports,” the agency said in its report.

“In addition, the U.S. tax reform and associated fiscal stimulus are expected to temporarily raise U.S. growth, with favourable demand spillovers for U.S. trading partners — especially Canada and Mexico — during this period.”

The IMF cited increased investment as businesses take advantage of lower corporate tax rates; it projected U.S. growth to increase to 2.7 per cent this year, from 2.3 per cent in 2017.

The agency noted that risks to its global outlook were “broadly balanced” in the near term, but seemed to skew to the downside in the medium term.