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Bank of Canada: Oil and politics create growth obstacles

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Staff Writer | May 12, 2017
Bank of Canada
Canada   An assessment of global business activity

Lower commodity prices and political developments in Europe and the United States make for an uncertain economic future, the Bank of Canada said.

An assessment of global business activity from economists at the Bank of Canada found the pace of spending is expected to accelerate as last year's severe contraction in commodity prices fades.

Crude oil prices last year dropped below $30 per barrel as global supplies far outweighed demand. A decision from the Organization of Petroleum Exporting Countries to curb production to balance the market helped add another $20 per barrel to the prices of oil, establishing a level of confidence for oil and natural gas players.

The Canadian economists said that, even as that pressure fades, business investment growth will be moderated by factors like low productivity and slowing population growth.

Population factors extend beyond North America. The International Monetary Fund found an aging Asian population could be a drag on growth for economies like China and Asia. Chinese growth in gross domestic production of about 6.5 percent nevertheless outpaces the United States, Canada's top trading partner.

"Since 2014, business investment growth in advanced economies has experienced a renewed episode of weakness despite a strengthening in aggregate demand," the Canadian economists reported.


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