The Conference Board of Canada has lowered its forecast for economic growth this year following a contraction in the second quarter.
The think tank says it now expects real gross domestic product (GDP) to grow 5.1% in 2021 compared with its previous forecast in July for growth of 6.7%. The board's forecast for growth in 2022 held steady at 4.4%.
However, the board says economic growth is expected to cool toward the end of next year with annual gains of 1.6% to 1.7% for 2023 and beyond as economic stimulus effects wear off.
The latest report said the growth this year and next will come as consumers dip into their savings to spend. Rising oil prices are also expected to help the recovery in the oil patch.
However, the report said the distribution of vaccines remains challenging in many other countries and that the result has been weaker demand for Canadian agricultural, mining, manufacturing and energy products.
It said the spread of the COVID-19 Delta variant, even in countries with high vaccination rates, remains the largest 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 showing since the start of the pandemic. The agency also said its initial estimate for July showed a contraction of 0.4% for the month.
