January 14, 2016 / 7:29 PM / in 2 years

Even as oil price sinks, PM Trudeau is 'optimistic' about economy

KITCHENER, ONTARIO (Reuters) - Canada’s prime minister said on Thursday he was “optimistic” about the country’s economy and its potential for growth through innovation and diversification, even as it has been hurt by tumbling oil prices.

Canada's Prime Minister Justin Trudeau laughs during a meeting with Nova Scotia Premier Stephen McNeil (not pictured) in Trudeau's office on Parliament Hill in Ottawa, Canada, January 13, 2016. REUTERS/Chris Wattie

“I‘m tremendously optimistic about the Canadian economy,” Prime Minister Justin Trudeau told reporters after touring Google’s offices in southern Ontario.

“We have work to do, there’s no question about it, but we got elected on a very straightforward perspective that we need a government that bets on Canada, that invests in Canada.”

The Liberals came to power last October after promising to run deficits of up to C$10 billion ($6.96 billion) a year to stimulate the economy through infrastructure spending.

Sources familiar with the party’s plans told Reuters the government looked certain to break that threshold this year.

Trudeau did not respond directly to a question on whether he saw a need to fast-track infrastructure spending.

He also alluded to the country possibly moving away from reliance on its energy sector as a key driver of growth.

“I‘m very, very optimistic about our capacity to get Canada moving forward in the right direction after a time in which we had put all our eggs in one basket,” he said.

Trudeau’s comments come as the price of oil has fallen toward $30 a barrel, the cheapest in nearly 12 years, sending the Canadian dollar also to 12-year lows and prompting analysts to downgrade growth projections for the year. [ECILT/CA]

Canada was in a mild recession in the first half of last year, and the continued slump in oil prices has raised concerns the country could face a similar situation in 2016.

Indeed, bets are growing that the Bank of Canada will act again to cut interest rates to spur economic growth. Markets now see a nearly 50-50 split that the central bank will lower rates to 0.25 percent next week.

Trudeau said he would be discussing the need for investment in infrastructure and research and development around the world when he travels to the Davos economic forum in Switzerland next week.

Writing by Leah Schnurr; Editing by Bernadette Baum

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