Canada's economic forecast raised, now best in G7 this year: OECD

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The Organisation for Economic Cooperation and Development upgraded its global growth forecast for 2018 to 3.7 per cent, which would be the strongest in seven years.

As inflation takes a toll on consumer spending and Brexit uncertainty dents business confidence, the United Kingdom will drop from the second fastest growing G7 economy in 2016 to the second slowest this year and the slowest in 2018, the think tank for wealthy nations predicts. The organization maintained its Canadian outlook for 2018 at 2.3 per cent.

The OECD kept its forecast for global economic growth unchanged at 3.5 per cent for this year and upped it slightly, to 3.7 per cent from 3.6 per cent, for 2018.

Even so, the risk of an Australian interest rate rise next year has become a hot topic among economists following the recent run of strong jobs growth.

"The pace of expansion is projected to be faster this year than in 2016, with a further uptick expected in 2018, but strong, sustainable, and inclusive medium-term growth is not yet secured", the OECD said.

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"The underlying health of China's economy remains relatively firm", said UBS China economists in a research note.

The OECD's latest Interim Economic Outlook report also said Japan's real gross domestic product is seen rising 1.6 percent in 2017, up 0.2 point from the June report. "Structural efforts need to be intensified to bolster the nascent investment recovery, to address slow productivity growth and to ensure the recovery yields benefits for all", Mann added in her address.

Growth in the major emerging market economies has improved overall, helped by a rebound in some commodity producers and public infrastructure investment in China, although growth remains subdued in a number of oil-exporting economies.

The Canadian economy has consistently beat analysts' expectations this year, most recently by recording growth of 4.5 per cent between April and June this year, which was far above the consensus forecast of 3.7 per cent.

The relative slowdown was due to the implementation of a goods and services tax and the sudden withdrawal late previous year of higher denomination banknotes. The forecast for 2018 is unchanged at 1.6 percent growth. "Wage growth has been disappointing, keeping inflation at low levels", it said.