New OECD report on the state of Canada released
The Canadian economy is bouncing back forcefully thanks to a rebounding trade sector and policy measures, the Organization for Economic Co-Operation and Development (OECD) said in a report released today.
The OECD predicts the pace of recovery will be moderate going forward as policy stimulus is withdrawn, inventory rebuilding runs dry and households deleverage. Unemployment is expected to decrease but the high rate of household debt may be a risk to the outlook, the organization warns.
"The Bank of Canada should start normalizing its policy rate without delay and tighten gradually throughout the projection period. Governments should let remaining temporary stimulus measures expire to avoid over-stimulating the economy as it recovers on its own," the report said.
The organization recommends "fleshing out" fiscal consolidation plans and focusing on spending reductions.
The Paris-based organization forecasts the unemployment rate will fall to just below 8 per cent this year and 7.2 per cent next year.