Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.
Canadian Economy to Far Outpace Growth of Other G7 Nations, OECD SaysThursday, April 08, 2010 > 13:58:38
(CBC News – The Canadian Press)
A global economic forecasting group says Canadian economic growth will blow away that of other G7 nations by a wide margin during the first half of 2010. The Paris-based Organization for Economic Development and Co-operation is forecasting that Canada's economy grew 6.2% in the first quarter, well ahead of the 1.9% overall growth for the G7 nations.
The OECD predicts that Canada's second-quarter growth will be about 4.5%, nearly double the 2.3% growth expected from the combined G7.
The latest outlook comes as Canadian economic data shows the country embarked upon an enthusiastic rebound at the start of the year. In January, Canada's gross domestic product advanced 0.6%, driven by growth in activity in factories, at construction sites, in mines and in the oilpatch.
However, economists have cautioned that Canada's economic growth will likely slow down as the Bank of Canada is expected to raise interest rates this July, while consumers could decrease spending to pay off their debts.
In the OECD study, the organization said that growth in leading rich economies will slow in the first half of this year, with the United States and Japan outpacing sluggish Europe. The OECD links the slowdown to the end of some government stimulus programs and the emptying of inventory stocks – all while the recovery and labour markets remain frail after the worst global recession in decades.
Most of the global economic growth this year is expected in countries not addressed in the report, such as China, India and Brazil.
Still, "overall it is an encouraging picture," OECD chief economist Pier Carlo Padoan told a news conference about the agency's report on the Group of Seven industrial economies. "It is stronger in the United States and Japan, it is not as strong in Europe."
The OECD forecast that U.S. gross domestic product would rise 2.4% in the first quarter and 2.3% in the second quarter, down from 5.6% in the fourth quarter of last year. Forecasts for Japan are 1.1% and 2.3% for the first two quarters of 2010, down from 3.8% in the fourth quarter 2009. Forecasts for Germany fell, however, blamed on a slump in construction activity.
The OECD urged rich governments to end stimulus programs next year or earlier to avoid sinking deeper into debt. But it warned that they should do so gradually and carefully. “Despite some encouraging signs on activity, the fragility of the recovery, a frail labour market and possible headwinds coming from financial markets underscore the need for caution in the removal of policy support," the report said. "Consolidation should start in 2011, or earlier where needed, and progress gradually so as not to undermine the incipient recovery."