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Falling oil prices threatens recession in Canada

US, WASHINGTON (NEWS OBSERVATORY) — Economists in Canada are revising their growth forecasts amid falling oil prices, which are fueling concerns about the recession, Bloomberg writes.

“It is possible that Canada will not have [economic] growth in the first half of the year,” says Beata Caranci, senior economist at Toronto-Dominion Bank.

In addition to the shock of the collapse in oil prices, Caranchi notes the consequences of the outbreak of the coronavirus COVID-19.

Canada’s economic growth almost stopped in the fourth quarter of 2019, as exports fell at the fastest pace since 2017, and business investment declined. The collapse of prices in the global oil market further overshadows the prospects for the economy.

Oil prices on Monday showed the maximum one-day drop in almost 30 years, after OPEC and its allies, including Russia, on Friday could not agree on an additional reduction in production.

The collapse of the OPEC + transaction led to the outbreak of a price war between manufacturers.

“Given the market situation in the last couple of days, the likelihood of a recession [in Canada] has risen sharply,” warns Jean-Francois Perrault, senior economist at Bank of Nova Scotia in Toronto.

Last month, the average forecast of experts surveyed by Bloomberg envisioned an economic growth of 1.6% in 2020. This forecast was reduced last week to about 1% due to the effects of coronavirus. The effects of the oil shock this week are likely to lead to an even greater decline.

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Article is written and prepared by our foreign editors from different countries around the world – material edited and published by News Observatory staff in our US newsroom.