Latest report from OECD discusses growth expectations around the world this year
Growth is expected to ease globally as momentum sputters in countries like the U.S., with Canada showing signs of a sharp step down from its G7-leading 3% in 2017, according to a recent report from the Organization for Economic Cooperation and Development (OECD).
The monthly composite leading indicators report affirmed slowing growth across the 36-nation OECD with more declines on the horizon for Canada, the U.K., the Eurozone (including Germany, France and Italy), and in the United States where some cooling is expected later this year.
“In the United States and Germany, the tentative signs of easing growth momentum that were flagged in last month’s assessment have been confirmed,” the Paris-based research organization said in a statement.
Most forecasters have been anticipating a global slowdown, with the first quarter of 2019 being seen as particularly weak in Canada due to an 8.7% reduction in oilsands output that kicked in at the start of January.
“We do, however, continue to think growth will rebound from that weak showing as oil production ramps up and the rest of the economy continues to grow roughly at potential,” said Scotiabank deputy chief economist Jean-Francois Perrault in an article in the Toronto Star.
The OECD data, designed to anticipate turning points in economic activity up to nine months ahead, continues to flag stable growth in Japan, with easing momentum seen for Brazil and Russia.
Stable growth remains the assessment for the industrial sector in India and China, even though customs data Monday showed an unexpectedly steep decline in Chinese exports to the United States in December.
The OECD data shows a twelfth consecutive monthly drop in Canadian economic growth — to 99.1 in November from 99.3 the previous month amid signs that growth in the U.S. may be slowing faster than anticipated. The U.S. indicator fell for the third straight month to 99.6 and further below the 100 mark that points to steady growth. By contrast, China’s indicator rose slightly to 98.8.
The leading indicator for the Eurozone was below 100 for a fourth straight month, pointing to a continuation of the slowdown that began last year.
Canada’s economy is expected to expand by 1.9% in 2019 compared with 2.1% last year according to a survey of economists in early January by Bloomberg News that sees a 20% chance or recession within the next 12 months. The survey sees 1.5% growth in the first quarter versus an estimated 1.9% in the final three months of 2018.
U.S.-China trade tensions along with indications that global economic activity is approaching capacity “have taken some of the steam out of exports and put commodity prices on the defensive,” RBC chief economist Craig Wright said in a 2019 outlook, adding that consumers are being squeezed by three rate hikes in 2018 that pressured the housing sector, although RBC expects the central bank to hike rates two more times this year.
Statistics Canada says GDP rose 3% in Canada in 2017 — ahead of all the other Group of Seven countries — as household expenditures jumped by 3.5%.
Source: The Toronto Star