TORONTO (Reuters) - The Canadian government raised its 2010 economic growth outlook on Monday, based on forecasts from private sector economists, bringing its view closer in line to that of the Bank of Canada.
The average of 15 forecasts is for real growth in gross domestic product of 3.1 percent in 2010, up from 2.6 percent in the survey taken in December and used as the basis of the federal budget released in March.
Growth for 2011 is seen at 3.1 percent, down from 3.2 percent in the December survey.
“Overall, the March survey results suggest that the near-term outlook has improved since the December survey was conducted,” the Department of Finance said.
The government has used the average of private sector forecasts as the base for its fiscal planning since 1994, a method that aims to ensure independence in its estimates.
The Bank of Canada last week estimated 3.7 percent growth this year, slowing to 3.1 percent in 2011, after economic activity rebounded faster than expected in the fourth quarter of last year and early this year.
Nominal GDP, the broadest measure of the tax base, is seen growing 6 percent this year, up from 4.9 percent previously, and by 5.2 percent in 2011.
The poll suggests the unemployment rate will ease to 8.1 percent from the 8.5 percent seen in December, and to 7.7 percent next year.
The outlook is good news for the Conservative government, which is under pressure to show how it plans to balance the federal budget after it fell into deficit during the recession for the first time in a decade.
It is relying largely on economic growth to generate more tax revenue, but has said it is ready to pare down government spending if necessary.
“Over the medium term, the private sector average growth outlook remains broadly the same as in budget 2010,” the Finance statement said, referring to the government’s 2010-11 budget documents.
“The level of nominal GDP is expected to be about C$14 billion ($14 billion) higher in 2014 than projected in the budget. This suggests that the medium-term fiscal forecast presented in budget 2010 remains on track.”
The government will provide an updated medium-term fiscal forecast this fall.
The Department of Finance began surveying economists after fourth-quarter GDP was released on March 1 and completed the survey on March 29.
Reporting by Jeffrey Hodgson; editing by Rob Wilson