Conference Board of Canada downgrades 2016 growth forecast
Cites Fort McMurray wildfires, weak business investment
The Conference Board of Canada has become the latest organization to lower its growth forecast for the Canadian economy this year.
The think-tank cited this spring's wildfires in Fort McMurray and a slide in business investment in the oil and gas sector as it issued a new forecast that downgrades its growth expectations for the domestic economy from 1.6 per cent to 1.4 per cent for 2016.
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"The economy got off to a good start at the beginning of the year but, unfortunately, that momentum has largely dissipated," said the Conference Board's Matthew Stewart. "The economy will likely contract in the second quarter and then rebound towards the latter half of the year. However, this won't be enough to offset the second quarter's weakness."
The downgrade echoed a move earlier this week by the International Monetary Fund, which lowered its 2016 forecast for Canadian growth from 1.5 per cent to 1.4 per cent, also citing weakness in the resource sector.
Weak resource investment
The Conference Board said business investment in the oil and gas sector is forecast to fall by $14 billion this year with the price of oil expected to remain near $50 US a barrel.
Weakness in the global economy will also hurt Canada's growth prospects, the board says, as the U.K.'s vote to leave the European Union and the failed coup in Turkey could hurt business confidence.
It also says the low Canadian dollar will not be enough to stop export growth from slowing, as the U.S. consumer remains cautious and the global outlook is uncertain.
The fires that swept through northern Alberta in May and June are forecast to cause a 0.1 per cent hit to the country's economic growth this year.
"Many oilsands operations were forced to shut down production, resulting in a massive short-term loss in output estimated at 57 million barrels, equal to $3.5 billion in lost revenues this year," the Conference Board says.
Earlier this month, the Bank of Canada lowered its expectations for economic growth this year to just 1.3 per cent. That's down from the 1.7 per cent the bank was forecasting as recently as April.