February 1, 2024
Canada’s economy is set to grow at the third-fastest pace among advanced peers, ranking behind the United States and Spain in the International Monetary Fund’s (IMF) latest forecast. While overall growth is still below its average from 2000 to 2019, IMF chief economist Pierre-Olivier Gourinchas sees a combination of steady expansion and weakening inflation paving the way for a “soft landing” for the global economy.
“Risks to global growth are now broadly balanced,” Gourinchas stated in a news release on Tuesday. “We find that the global economy continues to display remarkable resilience, and we are now in the final descent towards a ‘soft landing’ with inflation declining steadily and growth holding up.” The IMF’s World Economic Outlook calls for global growth of 3.1 per cent in 2024, up two-tenths of a percentage point from the global lender’s October forecast.
Canada’s economy is expected to grow 1.4 per cent, a two-tenths of a percentage point decrease versus the IMF’s October estimate. India and China topped growth expectations for 2024, with estimates of 6.5 per cent and 4.6 per cent, respectively. The United States is seen leading advanced economies in 2024, with an expected growth rate of 2.1 per cent, followed by Spain at 1.5 per cent.
Last week, the Bank of Canada said economic growth has stalled in this country since the middle of 2023, and is now expected to stay close to zero for the first quarter of 2024. Stubborn core inflation measures led the Bank to leave its trend-setting lending rate at a 22-year high last Wednesday.
“As you move further into 2024, we expect global growth to start picking up,” Bank of Canada Governor Tiff Macklem told reporters at a press conference in Ottawa. “Most importantly for Canada, U.S. growth picks up. That increases demand for our exports.”
Business leaders say borrowing costs at this level are having a chilling effect on the economy. However, a recent survey of individual Canadians suggests fewer are struggling due to the central bank’s rate hikes, compared to a year ago. Statistics Canada is set to release a fresh snapshot of the economy on Wednesday via gross domestic product data for November 2023.
