IMF says Canada faring better than others in G7
Canada has avoided falling into recession with forecasts projecting a very modest degree of growth over the next year or so.
Statistics Canada reported Monday that that Canadian GDP grew 0.3 per cent in August, a better-than-expected increase fuelled by the energy sector.
Output in mining and oil-and-gas jumped 3.3 per cent, a bounce after wildfires in Alberta weighed on energy production in May.
Excluding energy, however, real GDP was unchanged.
Two per cent is about the level of growth the International Monetary Fund projects for Canada in both 2011 and 2012, in a preliminary report released recently after its officials conducted their annual mission here. That’s roughly the same forecast the Bank of Canada issued.
While growth in Canada is moderating, compared with our peers in the Group of Seven, “Canada is doing well, especially given the circumstances,” said Gian Maria Milesi-Ferretti, assistant director of the IMF’s North American division.
Over all, Canada suffered less than other G7 countries during the 2008-2009 financial crisis, Mr. Milesi-Ferretti said, and this is remarkable given its dependence on U.S. markets.
One reason for Canada’s relative success is its “resilient and well-supervised” financial system, along with credible financial policies from the government and the Bank of Canada, he said. The rapid rise of commodity prices after the crisis also helped.
Still, with so much uncertainty facing the world economy, Canada needs to remain flexible in case things deteriorate, the IMF report said. Fortunately, the Bank of Canada has some room to reduce interest rates slightly and take other fiscal measures. And if domestic demand were to fall sharply, “stimulus may become appropriate,” the IMF report says.
Both the IMF and the Bank of Canada are more optimistic about the Canadian economy a little further down the road. The IMF’s projection is for 2.6-per-cent growth in 2013, while the central bank says it could hit 2.9 per cent that year.
