TD lowers global GDP forecast

By James Langton | March 17, 2022 | Last updated on March 17, 2022
2 min read
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Economists at TD Bank have lowered their economic forecasts, citing the impact of Russia’s invasion of Ukraine and the resulting impact on global commodity prices.

TD economists forecast global GDP growth of 3.9% this year, down from their previous projection of 4.7%. They also lowered their 2023 forecast to 3.4% from 3.7%.

“The war in Ukraine and accompanying shock to energy, food and other commodity prices is the main factor behind the downgrade to the European outlook,” the forecast report said. “Softer growth through the winter months amid the spread of the Omicron Covid-19 variant has also weighed on the handoff for 2022.”

For Canada, TD sees average real GDP growth of 4% this year, slowing to around 3% in 2023.

Growth in the fourth quarter of 2021 was stronger than expected in Canada, and the economy largely shook off the effects of the Omicron wave, but the surge in commodity prices is now slowing momentum, it said.

“While higher prices for producers (both energy and food) will offset some of the losses, higher inflation will eat into purchasing power and slow consumer spending in the first half of 2022,” the report said.

“The good news is that households have the benefit of a white-hot job market,” it noted.

Combining the strong labour market with pent-up demand for services, TD said it sees “ample room for an ongoing expansion. Spending should remain resilient and accelerate as the price shock dissipates.”

In the face of robust inflation, TD indicated it expects the Bank of Canada to hike interest rates by 50 basis points at its next meeting, with four more rate hikes during the year to bring the overnight rate to 1.75% by the end of 2022.

It sees the overnight rate peaking at 2.00% in early 2023.

For the U.S., TD anticipates that annual growth will slow from 5.7% in 2021 to 3.2% this year, and to 2.5% in 2023.

It also expects the U.S. Federal Reserve to hike rates by 50 basis points at its next meeting, “with three more rate hikes this year, pushing the fed funds rate to 1.75% by the end of 2022 and 2.25% by the middle of 2023.”

That said, given the uncertainty posed by both the war and the pandemic, TD said “the path of rate hikes is also more uncertain, highly dependent on the evolution of financial conditions and their impact on economic activity.”

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James Langton

James is a senior reporter for and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.