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Canada’s economy is recovering keeping its moderate paces of a growth. However, the main risks are still a long period of low commodity prices and a correction of housing prices in two main cities in the country, notes the IMF.
At the moment, Canada adapts its economy to new conditions on the background of low commodity prices, especially oil prices, which is the main economic driver. However, uncertainty over situation with oil prices and unstable China’s economy are the main external risks for Canada. The IMF notes that consequences after a collapse of oil market continue to put negative impact on the economy.
The IMF thinks that low key rates along with a toughening of monetary policy and further weakening of a national currency will create a buffer zone on the background of influx of capital and labour resources from commodity sector to non-commodity economic sector. The IMF forecast Canada’s GDP to rise by 1.7% this year and by 2.2% in the next year.
High volumes of consumer credits and risks from overheating real estate markets in Toronto and Vancouver attracts government attention. The IMF estimates that the housing prices are overestimated by 10%-30%.
Experts think that Canada has to keep low interest rates, taking into account the economic conditions. From the other side, this situation leads to a growth of a household debt. It is a serious problem for the BOC that is trying to limit consumer borrowings without a loss for the economic growth.