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OECD Upbeat on Canada抯 GrowthMonday, April 11, 2011 > 11:10:26
(The Globe and Mail – Tavia Grant)
Canada is expected to lead growth among G7 economies in the first and second quarter of this year, a new forecast predicts.
The Canadian economy likely grew 5.2% in the first quarter of this year and 3.8% in the second quarter, the OECD said in an economic outlook Tuesday. That prediction is much higher than most Canadian first-quarter forecasts of about 4%.
It’s also higher than estimated growth among peers. Germany is expected to have the second-strongest growth for the first quarter, at 3.7%. The United States is pegged to grow 3.1% while Italy likely expanded only 1.1%.
The forecast comes after a report last week showed the Canadian economy grew 0.5% in January as factory activity grew at the fastest pace in more than seven years. Canada is starting to benefit from firmer demand in the U.S., its largest trading partner.
The OECD didn’t say why Canada’s growth is expected to lead its peer countries. But the country is broadly benefiting from stronger prices for commodities such as oil, gold and copper.
The forecast didn’t include Japan, which was ravaged by an earthquake and tsunami last month. It cited a preliminary estimate by local authorities saying the loss of physical capital is between 3.3% to 5.2% of annual GDP.
Broad concerns remain. Although the labour market has improved “somewhat” in most OECD countries, the jobless rate among most is still over 2 percentage points higher than before the crisis. Headline inflation has picked up “significantly” due to rising commodity prices.
Still, business confidence is strong outside of Asia, first-quarter growth will likely top most expectations, and global trade is picking up again, it noted. Emerging-market economies are underpinning the global recovery.
In sum, “it seems likely that the recovery is becoming self-sustained,” it said.