IMF: Canadian economy will still grow in 2018, just a little less

WASHINGTON — The International Monetary Fund projects moderate economic growth for Canada this year and next, albeit at a pace slower than last year and signifcantly behind that in the United States.

Its World Economic Outlook released Tuesday foresees growth in Canada of 2.1 per cent this year and two per cent next year.

That represents a slight downgrade from January’s outlook of 2.3 per cent forecast for this year, and it’s noticeably less than the strong three per cent growth Canada experienced in 2017.

It’s also less than the U.S. projections: the United States is projected to grow almost three per cent this year, which is a significant improvement from recent IMF outlooks.

“They’re very closely aligned with our forecasts,” said Brett House, the deputy chief economist at Scotiabank, where the prediction for Canada is one-tenth of a percentage point higher than what the IMF projects.

“Very, very close to our numbers.”

He attributes the rosier U.S. outlook to federal tax cuts, a massive US$300 billion spending package, and the possibility of an additional spending or infrastructure bill.

He also calls the slightly slower growth in Canada unsurprising.

House describes 2017 a unique “breakout year,” with growth boosted by the new federal child-care benefit and the oil rebound from sagging prices and the Fort McMurray fires.

Trade uncertainty, rising interest rates, and measures to cool the Toronto and Vancouver housing markets have also contributed to the slower Canadian growth projection, he said.

“Things continue at strong levels in 2018,” he said.

“But when you’re already at a strong level, growing at the same nearly three per cent rate that we saw last year is tough.”