IMF: Canada will outpace most G7 economies in 2017/18

President-elect Donald Trump remains a wild card

January 16, 2017
The Canadian Press
The Canadian Press

WASHINGTON—The International Monetary Fund says uncertainty surrounding the incoming Donald Trump administration in the US is making it difficult to forecast how the global economy will perform this year.

But the Washington-based IMF says it estimates the Canadian economy will grow by 1.9 percent in 2017 and 2.0 percent in 2018. That compares with its previous estimate of 1.9 percent growth in both years.

Canada is expected to have the second-fastest growth among the G7, ahead of the four European members and Japan. The IMF estimates the United States will lead the G7, with its economy expanding by 2.3 per cent this year and 2.5 per cent next year—up from previous estimates of 2.2 percent in 2017 and 2.1 percent in 2018. Its latest outlook for advanced economies as a whole has improved for the 2017-18 period, compared with its October estimates, due to somewhat stronger activity in the second half of 2016 and projected U.S. government stimulus.

But the IMF’s estimates for several large developing economies has been revised lower—notably India, Brazil and Mexico. It estimates Mexico’s economy will grow about 1.7 percent in 2017 and 2.0 percent in 2018—down 0.6 of a percentage point in each year from its October outlook.

Mexico has been a frequent target of comments by President-elect Donald Trump, who has promised before and since the November election that the United States will build a wall between the two countries. Trump has also said he will scrap the North American Free Trade Agreement—signed by Canada, the United States and Mexico—and focus on ways to keep jobs in the United States.

In an interview with German daily Bild and The Times of London, published on January 15, Trump said German car manufacturer BMW could face tariffs of up to 35 percent if they set up plants in Mexico instead of the United States. BMW said that the company would stick to its plans to produce cars in Mexico.

Earlier this month, Trump threatened on Twitter to slap a border tax on General Motors for importing the compact Chevrolet Cruze to the United States from Mexico. GM responded that it only imports a small number of Cruze hatchbacks and makes all of its Cruze sedans near Cleveland, Ohio.

On January 13, Trump spokesman Sean Spicer told reporters on a conference call that a US border tax on imported autos would not be applied to any one country and could impact Canada, according to a Bloomberg News report.