Export Development Canada, the country’s export financing arm, raised its forecasts for the global and Canadian economies for this year, and predicted the nation’s exporters will benefit from additional U.S. stimulus.
Canada’s economy will grow 2.7 percent this year, according to a statement by the Ottawa-based agency, up from the 2.2 percent pace projected in October. Export volumes will rise by 5 percent, EDC said, up from a previous forecast of 4 percent growth.
The U.S. stimulus is a “game-changer,” Peter Hall, the agency’s chief economist, said in a Jan. 25 interview at Bloomberg’s office in Ottawa. “We have a reprieve from what was otherwise a tenuous year.”
Federal Reserve policy makers said yesterday they are maintaining plans to buy $600 billion of Treasuries through June to support the U.S. recovery. The Fed has acquired $261 billion of Treasuries since it started carrying out the second round of so-called quantitative easing on Nov. 12. President Barack Obama signed an $858 billion measure in December that extends tax cuts for two years.
Hall said he’s more optimistic than the Bank of Canada about the potential impact on Canada of the U.S. stimulus. The central bank said last week the effect on the Canadian economy will be “attenuated” because the measures focus on stimulating personal consumption, rather than the capital goods and non-energy commodities that comprise the bulk of Canada’s exports.
The Bank of Canada’s report last week forecast growth of 2.4 percent for 2011, saying the U.S. stimulus would contribute about 0.2 percentage point to growth this year.