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The International Monetary Fund (IMF) is casting Canada as a shining star in an otherwise questionable global economic environment.

The IMF expects Canada’s economy will grow by 2.1% this year and 2.2% next year—better than many other industrialized countries.

Granted, that’s below the Bank of Canada’s previous estimate of 2.4% growth in both years, but the central bank is expected to revise downward that forecast Tuesday at a scheduled interest rate announcement.

In a new global outlook, the IMF is calling on many economies to step up their policy responses to what they say are signs of further weakness.

The IMF estimates the world economy to expand 3.5% this year. That’s down slightly from its previous estimate of 3.6% in April. The lending organization has also cut its forecast for global growth to 3.9% in 2013, from 4.1% three months ago.

And it shaved its U.S. growth forecast to 2% this year from its previous estimate in April of 2.1%. For 2013, it expects U.S. growth of 2.3%, down from 2.4%.

These projections, the IMF said, depend on two key assumptions.

First, European policymakers must follow through on the promises that were made at a leaders’ summit at the end of last month. At that time, the 17 nations that use the euro agreed to centralize the regulation of European banks and to expand the use of the region’s bailout funds.

The fund also said the U.S. needs to avoid the expiration of several large tax cuts and the imposition of big spending cuts that are scheduled to take place at the beginning of next year—changes that are known as the “fiscal cliff,” and which the IMF previously warned could lead to the U.S. facing another recession.

Christine Lagarde, managing director with IMF, warned in early July about the consequences if the U.S. failed to raise the debt limit and avoid the fiscal cliff. She said there “would be severe with negative spillovers to the rest of the world.”

© Copyright 2014 Rogers Publishing Ltd. Originally published on benefitscanada.com

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