Canada’s economy could be in for a significant rebound this year, according to an upgraded outlook from the Organization for Economic Co-operation and Development.
In a report released Monday, the Paris-based think tank also known as the OECD, said it now expects the Canadian economy to grow by 6.1% in 2021. The prediction is up from an estimate for growth of 4.7% that the OECD made in March.
The rebound will be thanks to reduced Covid-19 restrictions in the second half of the year and external demand, the think tank said.
Higher prices for commodities like oil and the projected increases in demand resulting from the U.S. fiscal package in March are also behind the boost in the country’s economic recovery.
The back half of 2021 could also see increases in consumer spending and improvements to the labour market as public health measures are lifted once the latest waves of Covid-19 die down.
The pandemic will continue to pose a risk to the pace of economic recovery, however, as more contractible variants of the disease continue to circulate and force jurisdictions in the country to enact additional health measures, the OECD added.
But the federal government’s recent budget indicated it may keep some of the supports given to households and businesses in place until the country is on the other side of the global health crisis.
The OECD said growth in Canada for 2022 is forecasted at 3.8% compared with a March estimate of 4%.
The revised outlook for Canada came as the OECD forecast global output would rise 5.8% this year, up from its forecast of 4.8% in December. Like Canada, this increase is attributed to the vaccine rollout in advanced economies across the world and the fiscal stimulus from the United States.
Other data from the think tank projects that Canada can expect to return to pre-pandemic gross domestic product per capita by the second quarter of 2022.
Statistics Canada is expected to release Canadian GDP figures for the first quarter on Tuesday.