Tuesday, November 29, 2011

Canada To Cut Interest Rates; Growth Forecast Drastically Cut

The OECD has warned that Canada should cut its interest rates as it faces significantly deteriorating conditions due in great part to the European mess.

"The risks are skewed to the downside" the Parisbased think tank for the world's wealthy nations cautioned in its latest Economic Outlook. "The outlook for the Canadian economy has worsened significantly."

"If not addressed, recent contagion to countries thought to have relatively solid public finances could massively escalate economic disruption."

The OECD  cut its outlook for growth in Canada for next year down to 1.9 per cent from its previous forecast of 2.8 per cent in May, based on the expected impact of the European debt crisis, a deteriorating external market for its exports made worse by the strong Canadian dollar, and high personal debt loads.

"Persistence or worsening of global growth prospects and financial-market turbulence may lead to a sharper slowdown in exports, while damaging business confidence and investment. A sharp correction in house prices could further (dampen) consumption,"

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