IMF downgrades forecast for Canadian economy
An oil sands facility near Fort McMurray, Alta., on July 10, 2012. (Jeff McIntosh / The Canadian Press)
Published Tuesday, October 6, 2015 11:13AM EDT
Last Updated Tuesday, October 6, 2015 9:05PM EDT
The International Monetary Fund is downgrading its forecast for the Canadian economy, as it notes the collapsing commodity prices that slowed the global economy in the past year could remain a threat in 2016.
In its World Economic Outlook released on Tuesday, the IMF downgraded its forecast for the Canadian economy by half a percentage point to 1 per cent this year. It forecast the growth for the Canadian economy in 2016 to be 1.7 per cent.
The IMF forecast that the global economy will grow 3.1 per cent this year, down from a July forecast of 3.3 per cent. This represents the slowest growth since the recession year of 2009, the IMF said.
In 2016, the global economy is forecast to grow 3.6 per cent.
In a press release, the IMF said commodity-exporting economies find themselves at a "difficult juncture."
"Global commodity prices have declined sharply over the past three years, and output has slowed considerably among commodity-exporting emerging market and developing economies," the IMF said.
In the report, the IMF said that lower capital expenditures in the oil sector were a major contributor to the slowdown in Canada.
"In commodity exporters, lower commodity prices weigh on the outlook through reduced disposable income and a decline in resource-related investment," the report said.
"The latter mechanism has been particularly sharply felt in Canada, where growth is now projected to be about 1 per cent in 2015, 1.2 percentage points lower than forecast in April."
The American economy is forecast to grow 2.6 per cent this year, up from a July forecast of 2.5 per cent, the IMF said. In 2016, the U.S. economy is forecast to grow 2.8 per cent, according to the report.
With files from The Associated Press