Business

OECD reduces growth estimates for Canadian economy

The Organization for Economic Co-operation and Development has reduced its estimates for Canadian economic growth this year and next - revising them downward by four-tenths and one-tenth of a point, respectively .

Revises 2013 forecast to 1.4% from 1.8% and 2014 prediction to 2.3% from 2.4%

A chart showing OECD estimates of growth in GDP, investment and consumption in Canada over time. (OECD)

The OECD has reduced its estimates for Canadian economic growth this year and next.

The Organization for Economic Co-operation and Development currently expects a 1.4 per cent advance this year for Canada — down four-tenths of a point from its November estimate of 1.8 per cent.

The international body, which makes economic forecasts and sets global standards in a number of areas, has also reduced its estimate for Canada's economic growth in 2014, now expected at 2.3 per cent — one-tenth of a point below the previous estimate of 2.4 per cent.

In both this year and next, the OECD expects Canada's growth to trail the United States, where the OECD expects an 1.9 per cent advance in 2013 and 2.8 per cent in 2014.

Both countries will outpace the 17 European Union countries that use the euro.

The OECD predicts the eurozone economy will shrink by 0.6 per cent this year, after a 0.5 per cent drop in 2012.

In its regular six-month update, the international body said Wednesday that Canada will benefit from business investment because of low capital costs, still-high commodity prices and improving confidence.

External demand is also expected to contribute because of expanding U.S. and non-OECD markets as well as a depreciating exchange rate.

It expects Canadian household spending to remain unchanged, however, as easy monetary policy will be offset by tightening mortgage rules, debt reductions and a consolidating public sector.

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