TORONTO — The OECD has lowered its projections for Canadian, American and global economic growth over the next two years.
The Paris-based economic think-tank is calling for an "urgent policy response" to slowing growth, urging governments to borrow and spend money while interest rates are low.
The Paris-based economics think-tank now estimates Canada's economy will grow by 1.4 per cent in 2016, slightly more than the 1.2 per cent estimated for 2015 but less than the OECD's previous estimate for this year of 2.0 per cent growth.
Canada's economic growth is expected to pick up to 2.2 per cent in 2017, but that would be 0.1 per cent less than previously thought.
The OECD also expects U.S. economic growth over the next two years will be slower than the 2.4 per cent estimate for 2015.
The OECD has slashed Canada's economic outlook in its latest forecast, by a larger margin than any other major economy. (Chart: OECD)
The Organization for Economic Co-operation and Development also lowered its outlook for global economic growth to 3.0 per cent in 2017 and 3.3 per cent in 2017 — a decrease of 0.3 for both years.
It points to recent weak data from major economies including the United States and Canada as well as financial instability that's reflected in the fall of equity and bond prices worldwide.
"The world economy is likely to expand no faster in 2016 than in 2015, its slowest pace in five years. Trade and investment are weak. Sluggish demand is leading to low inflation and inadequate wage and employment growth," the OECD said.
"The downgrade in the global outlook since the previous economic outlook in November 2015 is broadly based, spread across both advanced and major emerging economies, with the largest impacts expected in the United States, the euro area and economies reliant on commodity exports, like Brazil and Canada."
The estimate for U.S. growth has been lowered by 0.5 to 2.0 per cent in 2016 and by 0.2 to 2.2 per cent in 2017. There were also downgrades for the other G7 countries — Germany, France, Italy, Japan and the United Kingdom — as well as Brazil.
The forecasts for China held steady at 6.5 per cent growth in 2016 and 6.2 per cent in 2017. India's growth estimate for 2016 was raised to 7.4 per cent, up 0.1, while the 2017 estimate was lowered to 7.3 per cent, down 0.1.