WASHINGTON (Sputnik) — The Canadian economy faces the worst challenge in years caused by declining oil prices, the International Monetary Fund (IMF) said in a press release on Monday upon concluding consultations with Canada.
"The persistent oil shock remains a major test of Canada’s economic and financial resilience since the 2008 global financial crisis," the IMF stated.
The Fund noted that Canada’s growth started to decline in 2015, because energy companies cut investment spending as oil prices declined.
The IMF explained that the economic decline resulted in concerns about the elevated level of household debt and contrasting house prices, which rapidly rise in some areas, but fall in others.
"Growth is expected to rebound in 2016, supported by exchange rate depreciation and accommodative monetary and fiscal policies," the IMF continued.
The Fund added, however, that uncertainty about oil prices and challenges in the global recovery suggest the economic outlook is likely to tilt to the downside.
Oil prices have plunged over the past two years from $115 per barrel in June 2014 to less than $30 per barrel in January 2016. The price drop has been attributed to slowed global economic growth, decreasing energy demand and major producers flooding the market with oil.