IMF projects 2017 Canadian growth to top G7 nations

The International Monetary Fund has raised its estimate for Canada’s economic growth rate for this year and 2018, putting it at or near the top of the heap among advanced economies.

The Washington-based IMF is now estimating Canada’s gross domestic product for 2017 will be 3.0 per cent — half a percentage point higher than its July estimate. That would put Canada ahead of all the other Group of Seven countries, with the United States coming second at 2.2-per-cent growth from last year.

The IMF’s world economic outlook is similar to estimates issued last month by the Paris-based Organisation for Economic Co-operation and Development, which also said Canada would top the G7 countries this year.

The IMF said Canada’s pickup in growth reflects reduced drag from lower oil and gas prices with assistance from government spending and central bank policies.

It expects next year’s Canadian year-over-year growth rate will slow to 2.1 per cent in 2018, but that’s still 0.2 per cent above the IMF’s July update and secondhighest among the G7 behind the United States at 2.3 per cent.

But it also warned policy-makers not to get too comfortable even as it raised its global growth forecast amid brightening prospects in the world’s biggest economies.

In addition to Canada, the IMF lifted its growth outlook for the U.S., the euro area, Japan and China from its last forecast in July. The recovery spans roughly 75 per cent of world output, according to the IMF.

The fund projects the global economy will grow 3.6 per cent this year and 3.7 per cent next, in both cases an increase of 0.1 percentage point from its previous estimate.

Analysts surveyed by Bloomberg expect gross domestic product to climb 3.4 per cent in 2017 and 3.5 per cent in 2018.

Either way, the recovery is accelerating from a low gear — global growth of 3.2 per cent last year was the slowest since the Great Recession of 2007-09.

The fund warned that mediumterm risks are tilted to the downside, highlighting dangers from tightening financial conditions, low inflation in advanced economies, financial turmoil in emerging markets and protectionist policies. “Neither policy-makers nor markets should be lulled into complacency,” IMF chief economist Maurice Obstfeld said in the World Economic Outlook report.