Bad start to year to limit Canadian growth: TD

The TD Bank says Canada’s economy will be slightly weaker than it had expected, mostly because it is waiting for the U.S. to kick into gear.

The chartered bank’s latest forecast has Canada expanding by 2.2 per cent in 2014, one-tenth of a point slower than previously thought, but will make up for it in 2015, when it speeds up to 2.6 per cent.

The major factor, the bank says, is that the U.S. economy stumbled badly at the start of this year due to severe winter weather, an inventory buildup and poor home sales.

The result is that U.S. growth has been downgraded half a point to 2.2 per cent this year, which has had a headwind effect on Canada’s economy. Fortunately, the bank says the U.S. is already showing signs of bouncing back from the temporary setback, and Canada should go along for the ride.

The U.S. is expected to grow at about three per cent for the rest of the year and 3.1 per cent next year.

Unfortunately, conditions are not so great in the rest of the world, even if they are improving. The eurozone will barely eke out one per cent growth in 2014, although that’s better than the minus 0.4 retreat of 2013. And China remains stuck in what is considered a moderate pace of growth of 7.4 per cent and seven per cent this year and 2015, after running at about 10 per cent pre-recession. China represents almost 15 per cent of the global economy.