IMF Lowers Canadian Economic Growth Outlook as U.S. Recovery Misses Expectations
WASHINGTON—The International Monetary Fund (IMF) has lowered its estimates for Canadian growth in 2016 and 2017, pointing to a weaker U.S. economy than projected earlier this year.
The IMF is now forecasting Canada’s gross domestic product will grow by 1.2 per cent this year and 1.9 per cent next year.
Both estimates are 0.2 percentage points lower than an IMF outlook issued in July.
Among other things, it says Canada has been negatively affected by unexpected weakness in the United States — the world’s largest economy and a major market for Canadian goods and services.
The IMF’s revised estimate for the U.S. economy has been lowered by 0.6 percentage points to 1.6 per cent. It’s also lowering the 2017 estimate for the United States by 0.3 percentage points to 2.2 per cent.
The Washington-based organization says the global economy faces subdued economic growth in the short and long term. But it left its estimate for world economic output unchanged at 3.1 per cent this year and 3.4 per cent next year, as the slowdown in the U.S. and other advanced economies is offset by slightly stronger output in developing and emerging nations.
“Taken as a whole, the world economy has moved sideways,” said IMF chief economist Maurice Obstfeld.
The IMF said that the “precarious nature” of the recovery from the 2008 financial crisis risked policies that “would hamper productivity, growth and innovation.”
“It is vitally important to defend the prospects for increasing trade integration,” Obstfeld said. “Turning back the clock on trade can only deepen and prolong the world economy’s current doldrums.”
The comments were partly a reference to the policies of Republican presidential nominee Donald Trump. Trump has criticized U.S. trade deals with Mexico and China and wants tougher immigration policies.
The IMF report didn’t mention Trump specifically. But it said that “anti-immigrant and anti-trade rhetoric have been prominent from the start of the current (U.S.) presidential election round,” and that there has been “pressure to adopt populist, inward-looking policies” around the world, citing the recent British vote to leave the European Union as an example.