OECD: Canada to Lead G7 Growth in 2011; Risks of Global Inflation

The Organization for Economic Co-operation and Development says Canada will lead all Group of Seven countries in economic growth in the first half of 2011..


The OECD says that the global recovery is getting traction, with data exceeding its previous expectations from just a few months ago, with business investment and exports are driving the recovery.
Pier Carlo Padoan, OECD chief economist:  "The outlook for growth today looks significantly better than it looked a few months back,"
Canada expects annualized first-quarter GDP growth of 5.2%  and 3.8 % in the April-to-June period..

Last November, the OECD expected Canada to record annualized growth of 2.4% in the first quarter and 2.6% in the second.

No doubt high oil and commodity prices have something to do with it.

Excluding Japan, the OECD said it anticipates the G7 to post 3.2 per cent annualized first-quarter growth and 2.9 per cent in the following three-month period.

The OECD added there are many factors in favour of the global economy: corporate balance sheets outside of the financial services are robust, labour markets are  improving.
"Considering the balance of strengths and fragilities, and with financial conditions improving across the board, it seems likely that the recovery is becoming self-sustained,".

Inflation

The OECD said economies are improving so much that central banks in some countries "will need to deal with a risk that inflation expectations may become unanchored." In addition, policy-makers need to address inflated balance sheets with "credible and growth-friendly medium term plans," with emphasis on spending cuts and not tax increases (why if the recovery is so good?)