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Canada ‘leading the charge’ as calls for more fiscal stimulus grow

OTTAWA – Canada is emerging in front of the pack as an increasing number of economic bodies all over the world are calling on governments to ramp up public spending amid stubbornly weak global economic growth.

OECD sharply downgrades Canadian growth, calls for urgent action on world economy

The Organization for Economic Co-operation and Development said in a report Thursday that more public investment is required in advanced economies because it becomes clear that monetary policy alone has failed to stoke growth. Many central banks have brought their interest rates down to zero as well as attempted to buy long-term bonds inside a bid to invigorate their economies.

Those efforts alone now appear set to fail, the OECD said because it downgraded its 2016 global growth outlook by 0.3 suggests three percent, matching last year’s underwhelming growth rate. Canada received one of the sharpest downgrades among civilized world, with growth predicted to average only one.4 per cent this year, in contrast to a forecast of two per cent made in November.

But economists noted that even while Canadian growth lags this season, the nation has emerged in front of the curve as debt levels and the current budget take lots of space to maneuver around the fiscal front in the way the OECD recommends.

“Canada sticks out among few countries that really has got the fiscal leeway to spend more,” said Emanuella Enenajor, The united states Economist at Bank of the usa Merrill Lynch. “Our net debt-to-GDP, if you combine federal, local and provincial, looks very low compared to our developed economy peers. Therefore it makes sense that Canada is leading the charge on this.”

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