Business

Global growth slowing but Canada steady, IMF says

The International Monetary Fund has tweaked its prediction for Canada's economic growth this year slightly higher, while lowering its forecast for increases in global output.
Anti-austerity demonstrators protest in Madrid on Monday. The IMF says European policymakers must follow through on promises made to resolve the eurozone debt crisis. (Emilio Morenatti/Associated Press)

The International Monetary Fund has tweaked its prediction for Canada's economic growth this year slightly higher, while lowering its forecast for increases in global output.

In its latest World Economic Outlook released Monday, the IMF called for Canada to grow 2.1 per cent this year, an increase of a tenth of a percentage point from its April outlook. And it kept unchanged its call for Canadian growth of 2.2 per cent in 2013. That’s better than many other advanced economies.

The IMF’s projection for Canada falls short of that by the Bank of Canada's current estimate of 2.4 per cent growth in both years, but the central bank is expected to lower that forecast tomorrow at a scheduled interest rate announcement.

The IMF lowered its forecast for global growth by a tenth of a percentage point, to 3.5 per cent in 2012 and by 0.2 to 3.9 per cent in 2013.

The international lending agency warned that the risks that its estimate will fall short "loom large."

Much depends on how well European policymakers must follow through on the promises that were made at a leaders' summit at the end of last month to deal with the eurozone’s debt crisis, including pledges to centralize the regulation of European banks and to expand the use of the region's bailout funds.

Secondly, it said, recent efforts by central banks in large developing countries to ease credit would have to succeed.

And, it says, the United States must avoid at all costs a fiscal cliff where stimulus is abruptly withdrawn, and should promptly raise the debt ceiling to avoid of a repeat of last August's manufactured crisis. Last August, a battle between the Obama administration and Congress over raising the limit wasn't resolved until the U.S. almost defaulted on its debt.

The IMF shaved its growth forecast for the U.S. to two per cent this year from its previous estimate of 2.1 per cent. For 2013, it expects the American economy to expand by 2.3 per cent, down from its April projection for 2.4 per cent.

                                                                                                                                                                                                   
IMF Forecast
Change from April estimates
2012201320122013
World3.5%3.9%-0.1-0.2
Canada2.1%2.2%0.1unch.
Advanced economies1.4%1.9%unch.-0.2
Euro area-0.3%0.7%unch.-0.2
Emerging economies5.6%5.9%-0.1-0.2

With files from The Canadian Press and The Associated Press

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