World Economy

Canada Economy to Expand by 1.9%

Canada is expected to have the second-fastest growth  among the G7.Canada is expected to have the second-fastest growth  among the G7.

The International Monetary Fund is projecting strengthening world growth in 2017 and has upgraded its estimates of Canada’s economic potential. However the Washington-based agency says any moves by the incoming Donald Trump administration to restrict trade could dampen the improving outlook.

In its report, the IMF says it estimates the Canadian economy will grow by 1.9% in 2017 and 2% in 2018. That compares with its previous estimate of 1.9% growth in both years, CBC reported.

Canada is expected to have the second-fastest growth among the G7, ahead of the four European members and Japan.

The US is also expected to power ahead with its economy expanding by 2.3% this year and 2.5% next year, helped in part by government spending.

“Markets have noted that the White House and Congress are in the hands of the same party for the first time in six years, and that change points to lower tax rates and possibly higher infrastructure and defense spending,” Maurice Obstfeld,  IMF research department director, said in prepared remarks on Monday.

He predicts a swifter pace of interest-rate increases by the US Federal Reserve as a result of this increased pace of US growth.

 CCI Slids

Canadian consumer confidence slid for the second week as the share of those expecting the country’s economy to shrink reached a nine-month high, telephone polling shows.

The Bloomberg Nanos Canadian Confidence Index fell to 56.3 from 56.5 a week earlier, driven by weakness in the sub-indicator measuring expectations for the overall economy.

The share of those expecting a contraction in the next six months rose to 32.1 from 30, the highest level since April. The share of those expecting the economy to strengthen fell to 20.8 from 23.

The two-week decline in confidence is at odds with the latest trade and labor data, as well as the Bank of Canada business outlook survey, Bloomberg economist Robert Lawrie said. “This disconnect might suggest households’ growing impatience with the speed of the fiscal stimulus as well as increased uncertainty during the formation of the new US administration,” Lawrie said.

Prime Minister Justin Trudeau’s government took power 14 months ago on a mandate to cut middle-class taxes and spend billions more on infrastructure to drive growth. That infrastructure money is rolling out slowly, however.


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