You may have seen the recent downbeat economic news as the IMG downgrades Canada’s forecast for economic performance in 2016 – 2017. Actually, this isn’t as bad as it sounds initially.
The International Monetary Fund still predicts that Canadian GDP will grow (by 1.5 per cent in 2016 and 1.9 per cent next year), but not as much as expected in earlier forecasts. This is an improvement on the 1.2 per cent showing of 2015 and is consistent with predictions made by the Bank of Canada. This is something of a dampener on the more upbeat mood of the past few months where GDP and employment numbers have been good. However, as always in economics is it important to take account of the long term underlying factors rather than temporary blips and bounces.
In this case the factors affecting Canada appear to be international trade barriers, the low cost of oil and lack of demand for other commodities due to the global slowdown. There are plenty of countries in the same boat. The IMF forecasts for the USA were dark, as indeed they were for the global economy overall (an exception being for China where growth is predicted at a healthy 6.5 percent for this year and 6.2 per cent for 2017). The body warns that international economic growth is too slow, and this could risk social and political upheaval in some countries.