Amid oppressive winter weather, Scotia Economics is lowering its 2014 growth forecasts for both Canada and the U.S.

In a new report, Scotia says that it has lowered its forecast for Canadian GDP growth this year from 2.4% to 2.2%. “The downward adjustment primarily reflects a weaker Q1 performance due to inventory adjustments and adverse weather,” it says.

Similarly, Scotia has trimmed its U.S. GDP forecast from 3.0% to 2.8%, citing a downward revision to fourth quarter output readings and weakness in recent data.

A major factor in the outlook changes, Scotia suggests, is the tough winter weather in Canada and the U.S., which it says has, and is continuing to have, a material impact on output growth. “Consumers have preferred to hibernate instead of venturing out, with many retailers, tourist operations and restaurants reporting much weaker sales. Additional heating costs are taking an increasing bite out of household spending power,” it says. This, in turn, has curbed production to avoid inventory build-ups, and hampered hiring, the report says.

Some of that impact will be recovered once the weather turns, Scotia notes. “Economic activity is nonetheless expected to rebound solidly as extreme winter temperatures recede, unleashing pent-up demand for consumer and business purchases, and supported by reduced fiscal restraint,” it says.

As a result, its U.S. growth forecast for 2015 is unchanged at 3.0%, and it’s also maintaining its Canadian GDP forecast for 2015 at 2.5%. “We continue to expect that strengthening U.S. and global growth will support a pickup in exports and business investment into next year, while consumer and housing activity will remain on the softer side,” it says.

Looking longer term, Scotia says that it continues to expect that “global growth, led by the improving performances in most of the advanced economies, will regain increased momentum into 2015.”

However, in this environment, Scotia cautions that financial market and currency volatility “will likely remain on the higher side” due to “uncertainty about the strength and duration of the economic recovery, and disinflation trends worldwide.”

“Short-term borrowing costs are expected to remain at rock bottom levels. Longer-term government bond yields are in a holding pattern after moving higher in anticipation of the Fed’s eventual start to tapering, but can be expected to trend higher as the advanced economies put some ‘spring’ into their activity,” it concludes. “For the time being, the U.S. dollar is likely to strengthen somewhat further, buoyed by its renewed growth leadership among the advanced economies, the shift in Fed policy, and continuing pressure points internationally.”