Last Updated on January 24, 2019
The OECD has urged governments to respond to help strengthen demand after figures in its latest report show a decline in projected figures for Canadian, U.S. and global economic growth over the next two years.
The falling price of oil and other commodities have taken their toll on the Canadian economy in recent months. The OECD report pointed out the financial instability that is reflected in the fall of equity and bond prices worldwide.
The OECD predicted the Canadian economy will grow by 1.4 per cent in 2016, slightly more than the 1.2 per cent estimated for 2015 but less than its previous projection of 2.0 per cent growth for this year. Canada’s economic growth is expected to increase to 2.2 per cent in 2017, instead of the previously predicted 2.3 per cent.
The report stated, “Global macroeconomic policy, comprising monetary, fiscal and structural actions, must become more supportive of demand and resource reallocation. Experience to date suggests that reliance on monetary policy alone has been insufficient to deliver satisfactory growth, so that greater use of fiscal and structural levers is required.”
Trade and investment are weak while sluggish demand is leading to low inflation and inadequate wage and employment growth, the OECD report said. Growth is slowing in many emerging economies, with a very modest recovery in advanced economies and low prices depressing commodity exporters.
In response, Ottawa has said it will run a deficit in its upcoming budget in a bid to help give the economy a boost, in part by spending on infrastructure projects.
Compared to the OECD figures, the Canadian central bank is predicting slightly higher growth of 2.4 per cent in 2017.
The latest report comes in the wake of figures produced by Statistics Canada showing a 2 percent rise in wholesale sales to $57.2 billion in December, thanks to record results by the motor vehicle and parts subsector, which climbed 10.6 per cent to $11.3 billion.
The results exceeded expectations set by economists who had expected a gain of 0.2 per cent.
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