A new forecast from BMO Capital Markets maintains the Alberta wildfires will cause Canada’s economy to contract by 1% or more in the second quarter
A decline in gross domestic product (GDP) would mark the first quarterly decline for Canada’s economy since the second quarter of last year, when the country slipped into what some experts referred to as a technical recession.
"The First Canadian Bank" said a pullback also means that talk of an interest rate cut by the Bank of Canada could also ramp up, depending on the damage done near Fort McMurray.
Economists have spent much of the past month trying to assess just how much damage the wildfires in Alberta will do to the Canadian economy. Many economists have downgraded growth forecasts and some have warned that the fires will prolong Alberta’s recession into next year.
The Bank of Canada makes its interest rate announcement Wednesday. The bank had previously forecast in its April Monetary Policy Report that the Canadian economy would grow by 1% in the second quarter, helping push GDP higher by 1.7% this year.
