OTTAWA — The Organization for Economic Co-operation and Development slashed its growth estimate for Canada this year as it trimmed its outlook for the global economy.
In its latest interim economic outlook released Wednesday, the OECD said weak trade and financial distortions are exacerbating slow global economic growth.
"The marked slowdown in world trade underlines concerns about the robustness of the economy and the difficulties in exiting the low-growth trap,'' OECD chief economist Catherine Mann said.
"While weak demand is surely playing a role in the trade slowdown, a lack of political support for trade policies whose benefits could be widely shared is of deep concern.''
The think-tank said it now expects the Canadian economy to grow by 1.2 per cent this year, half a percentage point lower than its outlook in June.
Growth next year is expected to be 2.1 per cent, down from its earlier estimate of 2.2 per cent.
Condos under construction in Toronto. (Photo: Jean Heguy/Getty Images)
The OECD report said that prolonged low interest rates have also contributed to rising real estate prices, with house prices growing at a similar or higher pace than prior to the financial crisis of 2008 in a number of countries, including Canada.
The OECD cut its global forecast for this year to 2.9 per cent from its June estimate of 3.0 per cent. That's slightly below the 3.1 per cent growth seen last year.
Global growth next year is predicted to hit 3.2 per cent, down from an earlier forecast for 3.3 per cent.
A photo of the wildfire that raged in Alberta in May 2016. (Photo: Reuters)
The Canadian economy contracted in the second quarter due to the Alberta wildfires in May that temporarily shut down production in the oilsands and destroyed parts of Fort McMurray.
However, economists expect growth to bounce back in the third quarter as rebuilding work begins and the oilsands operations that were shuttered ramp production back up.
Statistics Canada reported Wednesday that wholesale sales climbed 0.3 per cent to $56.5 billion in July, the fourth consecutive monthly increase. Economists had expected a gain of 0.2 per cent, according to Thomson Reuters.
"The marked slowdown in world trade underlines concerns about the robustness of the economy and the difficulties in exiting the low-growth trap."
Five of seven subsectors gained ground, led by the motor vehicle and parts subsector and the food, beverage and tobacco subsector.
Wholesale sales were unchanged in July in volume terms.