Despite ongoing commodity price weakness, Fitch Ratings is raising its economic forecast for Canada.

In its latest global forecast published Wednesday, the rating agency reports that it has revised up its gross domestic product (GDP) growth forecast for Canada by 0.4 per cent to 1.8 per cent in 2016; accelerating to 2.3 per cent in 2017.

Oil prices will continue to drive a drop in energy investment in 2016, which will hamper growth in commodity-rich provinces, Fitch says, but the credit rating agency expects the impact of this will diminish over time. Additionally, expansionary fiscal and monetary policy are seen boosting growth.

Fitch is also maintaining its forecast for no change in interest rates in 2016 and 2017 from the Bank of Canada.

Globally, weakness in emerging markets (EM) and adjustments to energy sector spending will continue to weigh on growth, Fitch says. However, the credit rating agency has boosted growth expectations for China to 6.3 per cent in 2016 and 2017, from 6.2 per cent and 6 per cent, citing policy stimulus and the authorities’ stronger commitment to supporting near-term growth.

“The near-term threat to emerging market growth has eased, due to a more assertive stimulus policy in China and the stabilization of commodity prices,” says Brian Coulton, chief economist at Fitch, in a statement.

Global growth (based on an aggregate of 20 large developed and emerging economies is forecast to be 2.5 per cent in 2016, Fitch says, which is unchanged from 2015 and in line with its previous forecast in March. “Global growth should pick up to around 3 per cent in 2017 as GDP stabilizes in Russia and Brazil and the drag from energy adjustments starts to fade,” the credit rating agency says.