Canadian economic growth will suffer if the record price discounts on the country’s oil stays at current levels, which could force the Bank of Canada to hold off on raising interest rates, according to Toronto-Dominion Bank economists. Omar Abdelrahman and Brian DePratto said in a report Friday that Canadian gross domestic product could be cut by as much as 0.5 percentage points next year if oil prices remain at such low levels. “If current [oil] pricing holds, impacts on real activity, incomes, and government revenues would quickly mount,” the report said. “In that instance, Alberta’s economy would be hard-hit and national Canadian growth could be cut by as much as 0.5 percentage points relative to our current baseline path.” The economists said production cuts by Canadian energy producers so far this year will also shave up to 0.5 percentage points from real GDP growth in the fourth quarter. They added that if the energy sector was hit by more refinery delays or shutdowns, and oil prices did not recover by the Bank of Canada’s decision on interest rates in January, the central bank could put the brakes on tightening monetary policy. “This would suggest a more prolonged period of […]
Canada’s growth will be cut if ‘extreme’ oil price discounts hold: TD
