OTTAWA – The Conference Board of Canada has cut its forecast for economic growth this year after the contraction seen in the second quarter.
The think tank said on Wednesday it expects real gross domestic product in Canada to grow 5.1% in 2021 from its forecast in July for growth of 6.7%.
The board’s growth forecast in 2022 has remained stable at 4.4%.
However, the board says economic growth is expected to slow towards the end of next year with annual gains of 1.6 to 1.7 percent for 2023 and beyond as the economic stimulus effects fade away.
“Unprecedented levels of pandemic stimulus is easing as social distancing restrictions have largely been lifted across Canada, but over-indebtedness remains a long-term problem,” said Ted Mallett, director of council economic forecasts.
“These critical revenue measures led to a federal deficit of $ 228 billion in 2020. While a rebound in revenues, along with the easing of some major support measures led to an improvement in the deficit this year, the federal government dramatically increased its debt in just two years.
The report says growth this year and next will come as consumers dip into their savings to spend.
The rise in oil prices should also help the recovery in the oil zone.
However, the report says vaccine distribution remains difficult in many other countries and the result has been lower demand for Canadian agriculture, mining, manufacturing and energy products.
He said the spread of the Delta variant, even in countries with high vaccination rates, remains the greatest risk to the outlook for the global economy.
Statistics Canada said in August that the Canadian economy contracted at an annualized rate of 1.1% in the second quarter, its worst quarterly performance since the start of the pandemic.
The agency also said its initial estimate for July showed a contraction of 0.4% for the month.
This report by The Canadian Press was first published on October 6, 2021.