Newspaper article The Canadian Press

OECD Sounds Pessimistic Note about World Economy, Lowers Canadian Growth Estimates

Newspaper article The Canadian Press

OECD Sounds Pessimistic Note about World Economy, Lowers Canadian Growth Estimates

Article excerpt

OECD sounds pessimistic note about economy

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PARIS - The Organization for Economic Co-operation and Development is increasingly pessimistic about the global economy, including Canada's, and is warning that the "low-growth trap" will continue if governments don't change tack on spending and trade.

Overall, the OECD is forecasting global growth of three per cent this year and 3.3 per cent next year. Both are down 0.3 percentage points from its November outlook.

It's estimating Canada's gross domestic product will grow by 1.7 per cent this year and 2.2 per cent in 2017. That's down from the OECD's November estimate of 2.0 per cent growth in Canadian GDP in 2016 and 2.3 per cent in 2017.

The OECD notes that Canada's resource sector has been contracting but says the decline will slow. Activity in other parts of the economy will "gain traction," the organization said Wednesday.

"Business investment in the oil and gas sector continues to fall sharply -- it is likely to be about 60 per cent below its 2014 level in 2016 -- but should be a smaller drag on growth thereafter," OECD said in its analysis for Canada.

The OECD report was released a day after Statistics Canada reported that the national GDP grew by an annualized rate of 2.4 per cent in the first quarter of 2016, which was less than economist expectations of 2.9 per cent.

The quarter covered a period before the Alberta wildfires that shut down a significant portion of Canada's oilsands production in May. The disruption and devastation caused by the fires, which forced the evacuation of Fort McMurray and surrounding communities, is expected to cause a short-term drag on the economy.

The Bank of Canada said last week that its preliminary assessment shows that the disaster will cut 1.25 percentage points off real GDP growth in the second quarter.

In its April monetary policy report, the bank had predicted growth at an annual rate of 1. …

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