February 5, 2010
Economic Snapshot
International Monetary Fund expects stronger recovery for world and Canada
JOHN CLINKARD
consulting economist, CanaData
The International Monetary Fund’s outlook for global economic growth is considerably stronger than it projected just three months ago.
In terms of overall economic output, the IMF now expects global growth in 2010 to be 3.9%, compared to its previous estimate of 3.1%.
The IMF also bumped up its estimate for growth in 2011, to 4.3% from 4.2%.
This improved global outlook stems in large part from the effects of an unexpected surge in U.S. consumer spending, together with a pickup in the inventory cycle in the third quarter of 2009, which raised the prospects for developed countries.
In addition, global growth was augmented by stronger than previously projected growth of domestic demand in emerging and developing countries.
The IMF attributes much of the strength in the global rebound to the extraordinary amount of policy stimulus that both developed and less-developed countries have used to kick-start economic growth.
The IMF referred to the current recovery as “multispeed” in light of the different patterns of growth between developed and emerging countries.
For example, the IMF projects that the developed economies will grow at a lethargic rate of 2.1% in 2010, compared to a much faster 6% for emerging and developing economies.
Given the fact that developed countries are much more regulated and burdened by higher taxes than less-developed countries, it’s hardly surprising that their economies take considerably longer to return to full employment than their less-developed neighbours.
Closer to home, the IMF now projects that the Canadian economy will grow by 2.6% in 2010, up from its previous projection of 2.1%. In 2011 it expects growth of 3.6%.
This stronger outlook for Canada was reinforced by the latest gross domestic product stats for both the U.S. and Canada.
In Q4/2009, U.S. GDP increased by 5.7% at an annual rate, its strongest increase since Q3/2003.
In Canada, the economy grew by 5.4% at annual rates in November, following stronger than previously reported increases of 3.1% in October (m/m annualized) and 6.7% in September.
John Clinkard has over 30 years’ experience as an economist in international, national and regional research and analysis with leading financial institutions and media outlets in Canada.
Gross domestic product - Canada, world & emerging countries
Data Source: International Monetary Fund/Chart: Reed Construction Data, Canadata
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