Economic analysis

OECD says world economy beginning to rebound

PARIS – Canada is expected to lag several Group of Seven countries in the first quarter even as the global economy begins to rebound, the Organization for Economic Co-operation and Development said Thursday.

The international economic think-tank estimates that the Canadian economy will show growth of just 1.1 per cent in the first three months of this year, much slower than the United States or Japan and below the G7 average.

However, it is expected to pick up steam and grow by 1.9 per cent in the second quarter, slightly above the average.

Statistics Canada reported later Thursday that Canada’s gross domestic product grew by 0.2 per cent month-to-month in January, the beginning of the first quarter. The agency’s report for the full quarter won’t be out until May 31.

The G7 countries — Canada, the United States, Japan, Germany, Britain, France and Italy — are expected to post an average growth rate of 2.4 per cent in the first quarter ending March 31 and 1.8 per cent in the second ending June 30.

The OECD believes the U.S. economy advanced 3.5 per cent in the first quarter, which ends this month, but that its growth will moderate in the second quarter to 2.0 per cent.

Likewise, the OECD expects Japan’s growth will be a robust 3.2 per cent in the first quarter but slow in the second to 2.2 per cent.

Among the European G7 countries, Germany will be the only one growing faster than Canada — 2.3 per cent in the first quarter and accelerating to 2.6 per cent in the second.

The U.K. economy is expected to have only 0.5 per cent growth in the first quarter and 1.4 per cent in the second, while France’s economy is expected to contract by 0.6 per cent in the first quarter then expand by a modest 0.5 per cent in the second.

Italy’s economy is expected to shrink in both quarters, dropping 1.6 per cent in the first and 1.0 per cent in the second.

In an interim assessment that focused on the G7, the OECD said that the European Central Bank needs to do more to encourage banks to lend and economies to grow.

It notes that countries that use the euro are making progress in reducing their debts, but that some should be allowed to meet their targets more slowly to temper the impact on their economies.