OTTAWA (Reuters) - Canada expects to maintain real economic growth of at least 2 percent through 2017, but lower commodity prices will cause government revenues to be a little lower than expected, Finance Minister Jim Flaherty said on Monday.
The consensus of private sector forecasts, surveyed by his department, is for 2.1 percent growth this year, unchanged from the consensus forecast in the March budget. For 2013, the forecast is cut to 2.0 percent from 2.4 percent, but for 2014 it rises to 2.5 percent from 2.4 percent.
Flaherty told reporters after meeting private sector economists that lower prices have affected the nominal level of gross domestic product (GDP), which is not adjusted for inflation.
He said that, in turn, was hitting government revenues a bit, but that Canada remained on track to balance its budget in the medium term.
“The October survey underlines the renewed weakness we have seen ... especially in Europe and the United States, our two largest trading partners,” he said.
“In particular, Canada has been affected by volatile and lower commodity prices, which are dampening government revenue growth. This will have an impact on the fiscal outlook that was presented in Economic Action Plan 2012 (the March budget).”
He said the government would control what it can control, which is its spending, and that it did not plan a new round of economic stimulus measures.
“We remain committed to returning to balanced budgets in the medium term. We continue to control the growth in government spending.”
The mood among the economists was not all “doom and gloom”, Flaherty said. He said that despite problems in the United States, he was encouraged by modest growth there and by signs of life in the housing market, which will help Canada’s economy, especially lumber producers.
Flaherty added: “On average we’re doing OK on real GDP growth, and certainly relative to the rest of the industrialized world we’re doing relatively well on real GDP growth.”
Reporting by Louise Egan and David Ljunggren; Writing by Randall Palmer; Editing by Jeffrey Hodgson; and Peter Galloway