07/21/2016 09:20 EDT | Updated 07/21/2016 09:59 EDT

Canada's Economic Outlook Downgraded In Conference Board Report

Business investment is missing in action.

OTTAWA -- A new Conference Board of Canada report has downgraded its projections for economic growth in 2016 to 1.4 per cent, despite a strong start to the year.

The think tank says Canada's economic growth advanced at a solid annual pace of 2.4 per cent in the first quarter, driven by robust household spending, a surge in exports and a double-digit increase in residential construction.

But that momentum has largely dissipated after gross domestic product contracted in February and March, followed by wildfires in the Fort McMurray, Alta., region in May and June that shut down many oilsands operations.

A giant fireball is visible as a wildfire rips through the forest by Highway 63 south of Fort McMurray, Alta on May 7, 2016. The wildfires took a bite out of Canada's economic growth this spring, the Conference Board says. (Photo: Jonathan Hayward/The Canadian Press)

The board estimates that the temporary shutdowns will have reduced oil production by 57 million barrels this year, costing oil and gas firms $3.5 billion in lost revenues.

Its report says the largest source of weakness in the economy remains the steep deterioration in business investment due to the collapse in energy spending, and there's still no sign of a long-awaited recovery in non-energy investment.

The board says weaker global economic growth prospects -- factors that hurt Canada's trade sector -- are also dampening the country's outlook.