Workers at the Acrylon Plastics' manufacturing plant in WinnipegJohn Woods
Canada's economic growth will outpace those of other G7 countries by a wide margin in the first half of the year, the Organization for Economic Development and Co-operation says in a new forecast.
An OECD forecast released Wednesday pegged first-quarter economic growth at 6.2 per cent on an annualized basis and forecast the economy would expand by 4.5 per cent in the second quarter.
The group's projection forecast overall growth among the G7 nations would slow in the first two quarters as government stimulus programs run their course and the jobs market remain fragile.
The forecast for Canada is rosier than most other projections for the first half of the year, though economists as a group believe growth is surging. There's no doubt that the first quarter was "remarkably strong," said BMO Nesbitt Burns economist Robert Kavcic, and that the second quarter will be strong as well.
Growth in the United States was forecast at 2.4 per cent in the first quarter and 2.3 per cent in the second, while Japan's economy will remain weak with expansion of 1.1 per cent in the first quarter, followed by 2.3 per cent in the second. Among the other countries: Germany at -0.4 per cent in the first quarter and 2.8 per cent in the second, France at 2.3 per cent and 1.7, Italy at 1.2 per cent and 0.5 per cent, Britain at 2 per cent and 3.1 per cent, and the G7 as a whole at 1.9 per cent and 2.3 per cent.
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"Recent high-frequency indicators point to a continued recovery of the world economy, albeit at variable speeds across countries and regions," the OECD said in the study.
"Financial conditions have improved on the back of narrowing money market spreads, and buoyant corporate bond and equity markets, notwithstanding the gyrations associated with the Dubai and Greek sovereign bond duress. Lending conditions have eased considerably. Despite their improved capital positions, banks nevertheless remain vulnerable to credit losses and exposed to interest-rate risk. Financial markets have been resilient in emerging markets, whose sovereign bond spreads have continued to narrow.
The group noted in particular how OECD countries have benefited through trade with major emerging economies such as China, India and Brazil.