Canada may have to downgrade growth forecasts: Flaherty

Thu Oct 18, 2012 2:31pm EDT
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By Louise Egan

OTTAWA (Reuters) - Canada may have to downgrade its economic and fiscal forecasts to take into account the European debt crisis and the choppy U.S. recovery, Finance Minister Jim Flaherty said on Thursday.

In the government's fall fiscal update due in the coming weeks, Flaherty will update the outlook for the federal budget deficit, based on the average growth forecast of private sector experts whom the government consults regularly.

"We expected moderate growth, the economists in Canada told us to anticipate moderate growth and as you know, we follow the recommendations (of) the average of a group of private sector economists," Flaherty told reporters.

"We're watching closely ... we may have to revise downward somewhat, but so far, we're in the same ball park as we anticipated in the federal budget," he said.

The 2012 budget presented in March envisions growth of 2.1 percent for this year and 2.4 percent next year.

The International Monetary Fund this month lowered its outlook for Canada to 1.9 percent growth this year and 2.0 percent in 2013.

And a recent Reuters poll of more than 20 economists found they expect Canadian growth of just 2 percent this year and next.

Ottawa has also been predicting the fiscal deficit will narrow gradually and return to a small surplus in 2015/16.   Continued...

Canada's Finance Minister Jim Flaherty speaks during Question Period in the House of Commons on Parliament Hill in Ottawa October 17, 2012. REUTERS/Chris Wattie