OTTAWA – The Bank of Canada is downgrading the country’s economic growth outlook yet again amid dampened expectations for exports and real estate activity.
The central bank also held its trendsetting interest rate at 0.5 per cent, as expected.
A new report by the bank points to exports as a main contributor for the reduced forecast for economic growth, following a weaker-than-anticipated performance and lower expectations for the future.
The bank is also predicting growth to take a hit from the expected decline in real estate sales activity that will follow the federal government’s recently announced measures to stabilize the housing market.
It is now projecting Canada’s real gross domestic product to expand by just 1.1 per cent this year, down from its July projection of 1.3 per cent.
For next year, the bank is forecasting growth of two per cent, down from its previous call of 2.2 per cent.
However, the bank says thanks to global and U.S. momentum, it still predicts the Canadian economy to rebound over the final half of this year from a second-quarter contraction, albeit at a slower pace, with an average real GDP growth of about 2.5 per cent.