OTTAWA, July 15 (Reuters) – Canada’s economic growth will not return to pre-pandemic levels until 2022, the Bank of Canada said on Wednesday, in an outlook that was cautious on U.S. growth and assumed there would not be a global second wave of COVID-19.
The Bank also said that its central scenario now sees Canadian oil production on a “considerably lower path than before the COVID-19 crisis,” due to weaker investment in the face of reduced demand and low oil prices.
It noted that while its outlook assumes the pandemic will have largely run its course by mid-2022, much uncertainty remains in the interim, with the timing and strength of the global recovery varying by region, and an ongoing risk of regional flare ups.
“Overall, the risks appear to be tilted to the downside, largely because of the potential for a second wave of the virus,” the central bank said.
The Bank of Canada marked down its growth outlook for the United States, Canada’s largest trading partner, noting “the resurgence in new COVID-19 cases since the middle of June is slowing the rebound as many states are scaling back their reopening plans.”
It now expects U.S. real gross domestic product (GDP) to fall 8.1% in 2020 and rise 3.4% in 2021, while global GDP will fall 5.2% in 2020 and rise 5.2% in 2021.
The Bank now sees Canada’s GDP falling 7.8% in 2020, then rising 5.1% in 2021, with economic growth reaching pre-pandemic levels in the first half of 2022.
(Reporting by Kelsey Johnson and Julie Gordon)
