Canada is set to put in a stronger economic performance through the second half of the year, says the Organization for Economic Co-operation and Development.
But the overall pace of recovery in the major developed countries will likely be hobbled by a slowdown in growth in emerging markets, according to the OECD’s interim economic assessment report released Tuesday.
The Paris-based OECD forecasts a growth rate of 2 per cent in 2013 for Canada, up from 1.7 per cent last year, and says economic activity is expanding at “encouraging rates” in North America, Japan and Britain while the euro is no longer in recession.
However, several emerging markets, particularly those with significant current account deficits, face challenges, says the OECD.
“While the improvement in growth momentum in OECD economies is welcome, a sustainable recovery is not yet firmly established and important risks remain,” it warns.
Both advanced and emerging economies “face the challenge of slower trend growth. Therefore, reforms to boost growth, rebalance the global economy and reduce structural impediments to job creation remain vital.”
Central banks, in particular, should continue doing their part for the recovery with loose monetary policies, says the OECD.
In Canada, the organization forecasts 4.8-per-cent GDP growth for the third quarter as the country bounces back from the impact of the Alberta floods and construction strike in Quebec. It sees 2.5-per-cent growth in the fourth quarter.
The flooding, strike and other one-offs pulled growth down from the 3-per-cent range to 1.7 per cent in the second quarter, but such factors as clean-up and construction, as well as catch-up production, would boost third-quarter growth, OECD economist Geoff Barnard said in an email.
For all of 2013, Britain’s economy is expected to grow by 1.5 per cent, up from 0.2 per cent in 2012 while France is set for a modest bump of 0.3 per cent, up from zero growth last year.
China is expected to experience growth of 7.4 per cent in 2013.
“The pace of recovery in the major advanced economies improved in the second quarter and growth is expected to be maintained at a similar rate in the second half of the year,” the OECD said.
“In several major emerging economies, however, growth has slowed. While growth in China appears to have passed the trough, financial market turbulence – partly triggered by discussion of a tapering of quantitative easing in the United States – has highlighted difficulties facing a number of other emerging countries, especially those with large current account deficits.”