As risks rise, TD shaves Canadian growth projection
A sign for TD Bank is shown in New York, Nov. 12, 2009. (AP / Mark Lennihan)
Published Wednesday, June 27, 2012 11:27AM EDT
Last Updated Wednesday, June 27, 2012 11:40AM EDT
OTTAWA - TD Bank economists have joined others in downgrading their forecast for both Canadian and global growth this year and next in light of renewed fears about Europe and other economic difficulties.
The TD economists say mortgage and other credit changes recently announced by Ottawa will contribute to forces slowing Canada's recovery over the next two years.
The bank now expects growth in Canada this year will average 2.1 per cent, shaving a tenth of a point from its March forecast. And it now expects two per cent growth in 2013, down four-tenths of a point from the earlier forecast.
That is still enough to generate modest job creation and TD says the unemployment rate should decline slightly to 7.1 per cent in 2013 from the current rate of 7.3 per cent.
Chief economist Craig Alexander says tighter mortgage rules announced last week, as well as new restrictions on borrowing on the value of homes, will reduce consumer spending by about a full percentage point in 2013. The changes don't come into effect until July 9.
But he says the changes are needed for the long-term health of Canada's housing market.