OTTAWA (Reuters) - Private sector economists estimate that Canada’s economy will grow at about 2 percent this year and will pick up after that, Finance Minister Joe Oliver said on Thursday.
An average of economists’ growth forecasts is used as a basis for fiscal planning by the Canadian government. The outlook is usually detailed in the federal budget, which will be released on April 21.
The outlook matched a Reuters survey released on Wednesday that showed economists consulted by the government ahead of budget were expecting a median 2 percent growth this year as the price of oil stabilizes.
The budget is normally released in February or March before the end of the fiscal year, but Oliver delayed the 2015-2016 budget due to the volatility in the price of oil, a major export for Canada. The government has vowed it will be a balanced budget after seven years of deficits.
“Canada is feeling the effects of low oil prices, both on the economy and on the revenue streams governments rely on,” Oliver told reporters.
“Nevertheless, economists estimate that Canada’s economy will expand by about 2 percent this year and that growth will pick up thereafter.”
Still, the 2015 forecast marks a step down from the 2.6 percent growth economists were expecting in the fall fiscal update released in November.
Oliver also told reporters the government was closely watching the booming residential real estate market and would take action to calm it down “if necessary.”
Oliver refrained from detailing what the consensus forecast for oil prices was, though he said he has taken a number that was “not excessively optimistic or pessimistic”.
TD Bank’s Craig Alexander, one of the economists meeting with Oliver, said the government’s delay of the budget has been useful.
“If you went back in time and said, ‘What was the range of private sector forecasters about the outlook four to six weeks ago,’ you actually would have had a much bigger range of projections,” he said.
“As time has passed, it’s allowed private sector forecasters to better understand how the oil shock could play out.”
With additional reporting by David Ljunggren; Editing by Jeffrey Hodgson and Ted Botha