The International Monetary Fund projected moderate economic growth for Canada this year and next, at a rate lower than last year’s and significantly slower than in the United States.
In a document generally positive about the current global economy, the latest IMF World Economic Outlook flashed warning signs of potential trouble ahead. The report forecast Canadian economic growth of 2.1% this year and 2% next year.
This represented a downgrade from January’s outlook of 2.3% growth forecast for this year, and it’s less than the strong 3% Canada experienced in 2017.
It’s also less optimistic than the prediction for the U.S., which is expected to grow almost 3% this year, a significant improvement from recent IMF outlooks.
Trade uncertainty, rising interest rates, and measures to cool the Toronto and Vancouver housing markets are the main contributors to the slower Canadian growth projection, observers stated.
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“[IMF’s numbers are] very closely aligned with our forecasts,” Scotiabank deputy chief economist Brett House told The Canadian Press. Scotiabank’s prediction for Canada is one-tenth of a percentage point higher than what the IMF projected.
House called the slightly slower growth in Canada “unsurprising”, despite 2017 being a unique “breakout year” with growth boosted by the new federal child-care benefit and the oil rebound from sagging prices.
“Things continue at strong levels in 2018,” House stated. “But when you’re already at a strong level, growing at the same nearly three per cent rate that we saw last year is tough.”