IMF Downgrades Canada’s 2019 Economic Growth To 1.5%

The International Montetary Fund (IMF) has cut its growth forecast for Canada.

In a report published Tuesday morning, the international agency that is headquartered in Washington, D.C., said it now projects Canada’s economy will grow 1.5% this year, down four-10ths of a percentage point from its previous estimate in January. The IMF sees Canada’s economy rebounding in 2020 to a growth rate of 1.9%.

The agency also cut its global growth estimate for 2019 to 3.3% from 3.5%, while leaving its 2020 outlook unchanged at 3.6%.

"Although a 3.3% global expansion is still reasonable, the outlook for many countries is very challenging, with considerable uncertainties in the short term, especially as advanced economy growth rates converge toward their modest long-term potential," the report states.

"While 2019 started out on a weak footing, a pickup is expected in the second half of the year. This pickup is supported by significant policy accommodation by major economies, made possible by the absence of inflationary pressures despite closing output gaps."

The IMF cited the normalization of monetary policy in advanced economies, escalating U.S.-China trade tensions, disruptions to the German automotive sector, tighter China credit policies, and macroeconomic stresses in Argentina and Turkey as some of the contributing factors to weakened global expansion in the second half of 2018 and first half of this year.

The agency also pointed to uncertainty around the new NAFTA agreement, which is yet to be ratified, as a downside risk to the global outlook and especially Canada’s economic performance.