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The Conference Board of Canada is cutting its estimate for economic growth for this year and next as central banks around the world hike interest rates in an effort to deal with soaring inflation.

In its new two-year outlook, the think tank says it is not expecting an economic contraction in Canada, but the risks are creeping up.

The Conference Board says it now expects Canadian economic growth will average 3.5% this year followed by 2.6% next year. That’s down from its earlier projections for growth of 4.0% in 2022 and 3.3% in 2023.

It says higher commodity prices are a saving grace for producers in Canada, but other sectors will have to cope with higher interest rates and slower export growth to the U.S.

Last week, RBC forecast that Canada is headed toward a recession in 2023, but said it would be short-lived and not as severe as prior downturns.

The Bank of Canada is set to make its next interest rate announcement on Wednesday as it looks to bring the annual inflation rate which hit 7.7% in May back to its target of 2%.

Many economists expect the central bank will raise its key interest rate by three-quarters of a percentage point, a move that would be its largest increase since 1998.