Business

IMF cuts Canada's GDP outlook to 2.2% in 2015

The International Monetary Fund has lowered its outlook for Canadian economic growth and the World Bank has trimmed expectations for exports, especially to China.

Lower oil prices, reduced business investment weigh on growth

The IMF is the latest group to downgrade its growth outlook for Canada because of lower oil prices. (Norm Betts/Bloomberg)

The International Monetary Fund has lowered its outlook for Canadian economic growth.

It describes Canada's recent performance as "solid" but says the risk to its growth has been increased by an unusually large drop in oil prices, weaker business investment in the energy sector and lower employment growth

The latest projection from the Washington-based agency calls for the Canadian economy to grow 2.2 per cent in 2015, down from the January estimate of 2.3 per cent.

Canada is expected to outperform Japan and countries that use the euro, but lag behind the United States and the United Kingdom.

The IMF estimates in a report issued Tuesday that the American economy will grow 3.1 per cent this year and the U.K's real gross domestic product will grow by 2.7 per cent.

The IMF also predicts the 18 countries that use the euro will expand 1.5 per cent in 2015, up from a January forecast of 1.2 per cent. The fund forecasts that Japan will grow one per cent this year, versus an earlier forecast of 0.6 per cent.

Slower Chinese growth

Exports have been touted as a saviour of the economy, with Canadian exporting set to rise on the lower dollar.

But the World Bank reported today that the outlook for exports may not be so rosy. 

Global trade only grew by 2.8 per cent in 2014, according to its latest estimate. It expects 3.3 per cent growth in global trade this year and four per cent growth in 201

In a separate report, the World Bank predicted a further slowdown in China until the end of the year and said that would hurt commodity exporters, such as Canada.

The headwinds facing the world economy, including lower oil prices and a high U.S. dollar, pose risks to East Asia's globally-integrated economies, the bank said in its analysis.

"The recovery in high-income countries continues to be slow and uneven, and a downturn in the eurozone and Japan would weaken global trade," it said.

The World Bank estimates China will grow 7.1 per cent in 2015, and 6.9 per cent in 2017, a more moderate pace than it has set in the past decade as its demand for lumber, metals and other raw goods helped power the Canadian economy.

With files from CBC News

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