Global outlook is looking strong but with potential large risks
The economies of Canadian provinces are set to slow this year and there are also some global concerns ahead.
The Conference Board of Canada says that all provinces will see growth weaken amid NAFTA negotiations, stalled pipelines, cooling housing markets, and weak business investment.
“Weaker economic growth is forecast across the country, with only British Columbia, Prince Edward Island, Ontario and Quebec expected to see growth above 2% this year,” said Marie-Christine Bernard, Director, Provincial Forecast, The Conference Board of Canada.
British Columbia and Prince Edward Island will have the fastest growing provincial economies in 2018, with real GDP growth of 2.6% with a more moderate 2.2% growth for Ontario and Quebec.
Following growth of 4.9% in 2017, Alberta’s economy is forecast to expand by just 1.9% this year.
Manitoba’s economy will benefit from strong population increases and numerous construction projects across various sectors. Nonetheless, real GDP growth is expected to ease from 2.9% last year to 2.1% in 2018 due to weak consumer spending at the start of the year.
What the OECD is saying about global growth
A report released Wednesday by the OECD says that global growth is generally positive for 2018-2019.
The roughly 4% estimated growth is close to the long-term average but there are some potentially large risks looming.
“The economic expansion is set to continue for the coming two years, and the short-term growth outlook is more favourable than it has been for many years,” said OECD Secretary-General Angel Gurria. “However, the current recovery is still being supported by very accommodative monetary policy, and increasingly by fiscal easing. This suggests that strong, self-sustaining growth has not yet been attained.”
Among the risks that the OECD is flagging are:
- Oil prices – which have risen significantly in the past year, and, if sustained, could add to inflation while softening real household income growth.
- Trade restrictions – threats have begun to adversely affect confidence, and, if such measures were implemented, they would negatively influence investment and jobs.
- Interest rates - normalisation in some economies, notably the United States, could expose financial vulnerabilities and tensions created by elevated risk-taking in financial markets and high debt, especially in emerging market economies with high levels of foreign currency debt.
The organization is calling for reform to be stepped up and is urging countries to boost investment in education and skills, as part of improvements in the use of tax and spending policies to raise living standards across the income distribution.