As the global economy continues to slide, Bank of Nova Scotia says it needs to prepare Canadians for more monetary stimulus.
The bank said it expects global economic growth to slow further in 2018 as the United States, Europe and Japan all face recession.
But the global outlook for 2018 remains “quite strong,” said executive vice-president Andrew Littrell.
The global economy is expected to grow 3.6 per cent in 2018, which would be the fastest pace since the recession in 2009.
The Canadian dollar will also be a factor, Littrel said, noting that inflation will remain low in 2018 due to the low Canadian dollar.
“It is a reflection of our economy that we have such low inflation, so we’re actually able to use the low inflation rate to mitigate some of the pressures that may be coming to bear,” he said.
“We’ve seen a lot of the world come to terms with a situation where the world is in recession and there is a lot that we can do to be prepared.”
While the bank is forecasting that growth in the United Kingdom will slow to 3.5 per cent next year, it’s forecasting a growth of 1.4 per cent this year and 2.2 per cent the year after that.
The bank said the U.K. is currently “a good place to be.”
“We think that the longer the recovery goes on, the more we can be prepared to use that growth to mitigate the risks of inflation,” Littler said.
The global economy has been hit by a series of negative developments, including the rise of a rising tide that is moving the planet’s oceans, a warming climate and an increase in extreme weather events.
The U.S. is already experiencing a slowing in global growth.
The Bank of Montreal also said it’s expecting growth to decline further in 2019, when the economy will slow significantly due to low energy prices and a weak U.N. climate change agreement.