Canada’s economy is projected to grow by 2.4% this year, equalling what’s now expected in the U.S. and ahead of the other Group of Seven (G7) countries, according to estimates released by the Organization for Economic Co-operation and Development (OECD) on Tuesday.
The Paris-based OECD had previously said Canada’s economy was expected to rise by 2.1% this year — better than last year but still modest compared with past economic recoveries.
The OECD also raised its estimates for several of the world’s biggest economies, including the U.S. and China, but kept its world economic estimate unchanged at 3.3% — just slightly better than last year’s weak 3%.
“Confidence has improved, but consumption, investment, trade and productivity are far from strong, with growth slow by past norms and higher inequality,” the OECD says.
The think-tank said Canada’s economy will be supported by export growth, a better market for commodities and government spending initiatives this year.
However, the OECD again raised a red flag about the rapid increase in house prices in Canada and other countries including Australia, Sweden and the U.K.
“As past experience has shown, a rapid rise of house prices can be a precursor of an economic downturn,” the OECD says.
The OECD works with the governments of 35 member countries, including Canada, and major non-member countries including China, India and Brazil to collect data and analyze economic trends around the world.
The modest pick-up in global growth in 2017-18 reflects the effect of ongoing and projected fiscal initiatives, notably in China and the U.S., and initiatives in other economies such as Canada, the report says.
“These are expected to catalyze private economic activity and push up global demand,” the OECD says. “Exiting the low-growth trap depends on the joint impact of macroeconomic, structural and trade policy choices, as well as on concerted and effective implementation of existing initiatives.”
The OECD’s report says the U.S. and Canada are projected to lead the Group of Seven countries in economic growth this year, with the next highest G7 country being Germany at 1.8% gross domestic product growth.
Next year, the U.S. economy is projected to grow by 2.8% and Canada’s is expected to expand by 2.2%, ahead of the other G7 countries. Global economic growth for 2018 is forecast to be 3.6%.
The OECD estimated Canada’s economic growth for 2016 would be 1.2% in its previous report issued in November, but that was upgraded Tuesday to 1.4%, in line with what Statistics Canada reported last week.
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