The Bank of Canada today revised its economic outlook for the year. The central bank says the federal government’s multibillion-dollar infrastructure stimulus spending program has turned a modest downgrade in the 2016 growth forecast into an upgrade.
The central bank expected government investments of about $25-bilion over the next two year to offset the negative consequences of shrinking energy sector investment, weaker foreign demand and a slightly stronger dollars. As a result it is now projecting economic growth of 1.7% for 2016, up three-tenths of a point from January. However, next year’s growth is predicted to shrink to 2.3% from the original 2.4%.
The bank is is holding it’s trend-setting interest rate at 0.5%–however it says it would have considered moving the benchmark if not for the federal infrastructure stimulus.