Canada’s economic growth may exceed forecasts, boosted by a recovering U.S. economy, Finance Minister Jim Flaherty said.
The economy may see growth of between 2 percent and 3 percent this year, Flaherty told reporters in Sydney after a meeting of policy makers from Group of 20 nations.
Canada is set to meet or exceed the G-20’s target of boosting gross domestic product by an additional 2 percent over five years, Flaherty said, speaking to reporters on a conference call today. “It’s easier for the United States and Canada to reach these goals than it is for some of the emerging economies.”
Following an initial surge after emerging from recession in 2009, Canada’s economy has struggled to build momentum, averaging just 1.9 percent annualized growth since the first quarter of 2011. Statistics Canada will publish growth data for the last quarter of 2013 on Feb. 28.
“I had lots of discussions with my American colleagues and they’re feeling quite positive about developments in the American economy, which should help Canada,” Flaherty said yesterday in Sydney.
The U.S. economy is showing broad signs of improvement, he said. “Their real estate market is better, certainly better than it was, the rate of savings has gone up, car sales have gone up, employment is better than it was.”
Canada, with the world’s 11th-largest economy, relies on exports for one-third of its output and three-quarters of those shipments are sent to the U.S. The economy will expand 2.3 percent this year, according to the median of forecasts compiled by Bloomberg.
Flaherty said he heard from some emerging-market economies that “have been relatively hard hit by currency trends and they voiced that concern.”
“I understand it,” Flaherty said. “I look at our own currency and see that a bit of a hit was taken on the Canadian dollar. Mind you, it’s both positive and otherwise, given exports and manufacturing.”
The Canadian dollar has lost 4.4 percent against the U.S. dollar since the start of the year, the worst-performing currency among the Group of 10.
Flaherty reiterated that Canada will swing to a surplus budget in the fiscal year that begins April 2015. He was asked whether the government still intends to allow income-splitting - - allowing families to divide income in order to reduce the tax burden -- once the surplus has been achieved, fulfilling a promise from the 2011 election campaign.
“It’s premature to start spending money when we don’t have it,” Flaherty said today. “There are different alternatives, including paying down public debt.”
“We agreed on further tax relief measures for families, and that remains the plan,” he said. “We’ll have to make some choices next year.”