Following the release of Canada’s most recent gross domestic product figures, one chief economist says her organization has downgraded its growth outlook for the later part of the year.
On Friday, Statistics Canada said real gross domestic product (GDP) grew 0.2 per cent in July, coming in higher than expected. Statistics Canada also noted that early estimates for August suggest real GDP is effectively the same, as strength in the public sector as well as oil and gas had been offset by declines in manufacturing and transportation as well as warehousing.
“We did think the economy was struggling a bit and we just updated our forecast actually and we downgraded growth projections for the second half of this year,” Dawn Desjardins, chief economist of Deloitte Canada, said in an interview with BNN Bloomberg on Friday.
She added that downgraded projections are reflective of a few factors, including “the fact that consumer confidence remains extraordinarily depressed and that the labour market is weakening. So from the demand perspective, it does suggest that we’re in a slower growth path.”
She highlighted that based on the results of a Deloitte survey of CFOs, 93 per cent indicated it is not currently a good time to take risks. Additionally, two-thirds of those surveyed said they are unsure about the demand side of the economy, according to Desjardins.
Following the release of the latest GDP figures, Bloomberg News reported Friday that zero growth in August maintains the possibility of larger rate cuts from the Bank of Canada going forward.
“Long story short, I think the Bank (of Canada) is going to continue to move that policy rate lower and probably get to something below three per cent by the middle of next year,” Desjardins said on her expected interest rate path.
With files from The Canadian Press and Bloomberg News
