Canada is headed for stronger economic growth in 2017 and 2018 than last year, but it’s too soon to predict how the Donald Trump administration will affect the global economy, according to an International Monetary Fund report.
The IMF estimated the Canadian economy grew by 1.3% last year and predicted in its world economic outlook Monday that gross domestic product will grow by 1.9% in 2017 and 2.0% in 2018.
The revised estimate for 2016 is up 0.1 of a percentage point from October, when the IMF estimated annual growth for Canada would be 1.2%. Its 2017 estimate is unchanged and its 2018 estimate is up 0.1 of a point.
By contrast, Mexico’s estimate has been lowered by 0.6 of a percentage point for both this year and next year, compared with the IMF’s October estimate — prior to Trump’s victory in November.
Mexico’s growth is still expected to outpace Canada’s in 2016 at 2.2% (up from 2.1% in the October estimate) but is expected to slow to 1.7% in 2017 and 2.0% in 2018.
Mexico has been a frequent target of comments by President-elect Donald Trump, who promised before and since the election that the United States will build a wall between the two countries.
The IMF’s research director, Maury Obstfeld, told reporters Monday during a news conference from Washington, D.C., that it’s too soon to predict Trump’s impact on U.S. policies, but said there is potential for significant disruption.
“The details of the U.S. policy mix matter and, as these become clearer, we will adjust our forecast and spill-over assessment,” Obstfeld said.
Oya Celasun, chief of the IMF’s world economic studies division, said that the lower estimate for Mexico’s growth was partly because markets “seem to be concerned about the uncertainty related to the future course of U.S. trade policy.”
Neither IMF official addressed the potential impact of U.S. policies on the Canadian economy.
Canada — like Mexico — is a partner with the United States in the North American Free Trade Agreement, which Trump has said is a “bad deal” for the United States that should be replaced.
But the president-elect has made few direct public comments about Canada, especially compared with his recent tweets and interviews about border taxes for vehicles made in Mexico and imported into the United States.
On Friday, Trump spokesman Sean Spicer told reporters on a conference call that a U.S. border tax on imported autos would not be applied to any one country and could impact Canada, according to a Bloomberg News report.
The IMF estimated the United States will lead the G7 in growth over the next two years, with its economy expanding by 2.3% this year and 2.5% next year — up from previous estimates of 2.2% in 2017 and 2.1% in 2018.
Canada — which has been recovering from the deep decline in global oil prices that began in late 2014 — is expected to have the second-fastest growth among G7 countries.
The IMF’s estimate for Canada’s 2016 growth is higher than a projection from the Bank of Canada in October.
In its fall monetary policy report, the Bank of Canada estimated 2016 full-year growth at 1.1% and 2% for 2017.
The Canadian central bank is set to provide an update on Wednesday.