Fiscal stimulus plan not enough to boost Canada 2016 GDP: Reuters poll

Thu Oct 22, 2015 6:33pm EDT
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By Anu Bararia

(Reuters) - Canada's economic growth will not receive a major boost next year from the newly elected Liberal government's fiscal stimulus plan, because of lingering uncertainty about oil prices and demand for Canadian exports, a Reuters poll released on Thursday showed.

A majority of around 30 forecasters, surveyed after the Bank of Canada left policy unchanged on Wednesday, said they have not revised their 2016 predictions and were not considering doing so.

Prime Minister-designate Justin Trudeau, who swooped to power in a landslide election victory on Monday, has proposed running an annual budget deficit of up to C$10 billion ($7.63 billion) for three years to invest in infrastructure and boost Canada's anemic economic growth.

However, many economists surveyed said they were waiting for Trudeau's policies to be implemented before revisiting forecasts.

After almost a decade of Conservative Party rule, economists said if they were to revise growth forecasts, the more likely move would be upward.

Canada experienced one of its slowest periods of growth in recent decades under the Conservatives, punctuated by the global credit crisis. Canada, the world's 11th largest economy, slipped into a mild recession in the first half of this year as oil prices tumbled.

Still, economists said a change in government does not mean that economic challenges have disappeared.

"To say, 'Oh now things will be better because of Liberals rather than Conservatives' would be more of a political hope than economic judgment," said Mark Hopkins, senior economist at Moody's Analytics.   Continued...

Canada's Liberal leader and Prime Minister-designate Justin Trudeau leaves at the conclusion of a news conference in Ottawa, Ontario, October 20, 2015.  REUTERS/Chris Wattie