Canada needs to do more to address housing market risks, says OECD

Camille Francis
June 8, 2017

The OECD has raised its 2017 GDP projection for Poland to 3.6 percent from 3.2 percent in a November forecast.

The OECD's warnings come a week after the International Monetary Fund said a further tightening of macro-prudential and tax-based measures to mitigate speculative and investment activity should be considered.

But while the OECD expects household consumption to ease, it said consumers would also use money normally earmarked for savings to keep spending in the face of higher inflation.

The OECD outlook attributed the projected GDP increase from this year's 2.6 percent to 2.8 percent in part to faster world trade, which will boost exports and business investments and help to offset a gradual decline in the growth of residential investment.

The OECD also saw a potential for "swift snap-back" in USA long-term interest rates when the Federal Reserve decides to reduce the size of its balance sheet, especially if it comes at a time of rising policy rates. "The uncertainty, and the assumed outcome, is projected to undermine spending, in particular investment", the report said.

US employers add 138000 jobs in May
That's because employers are struggling to find available workers now that the unemployment rate is near rock-bottom. The president has focused on manufacturing jobs, a sector that has seen steady growth since his election.

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In its latest economic outlook, the Organization for Economic and Cooperation Development (OECD) on Wednesday projected accelerated global growth for the 2017-2018 period, saying "greater efforts are needed to ensure that the benefits from growth and globalization are more widely shared".

While the near-term outlook for growth has improved, the OECD believes financial markets are anticipating even better outcomes than are likely, raising the risk of a "snap back" in asset prices that could in turn hinder the global economy.

Official figures last month showed the United Kingdom economy suffered an even deeper slowdown at the start of the year, as the services sector came under pressure and inflation dealt a blow to household spending. That leaves a cloud of uncertainty hanging over Mexico, whose economy has been suffering from a surge in inflation that prompted the central bank to raise borrowing costs to an eight-year high.

Labour market figures for January to March published by the Office for National Statistics last month showed unemployment fell by 53,000 to 1.54 million - a rate of 4.6% - the lowest since the summer of 1975.

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