Bank of Canada: Oil and politics create growth obstacles

May 12 (UPI) -- Lower commodity prices and political developments in Europe and the United States make for an uncertain economic future, the Bank of Canada said.

An assessment of global business activity from economists at the Bank of Canada found the pace of spending is expected to accelerate as last year's severe contraction in commodity prices fades.

Crude oil prices last year dropped below $30 per barrel as global supplies far outweighed demand. A decision from the Organization of Petroleum Exporting Countries to curb production to balance the market helped add another $20 per barrel to the prices of oil, establishing a level of confidence for oil and natural gas players.

The Canadian economists said that, even as that pressure fades, business investment growth will be moderated by factors like low productivity and slowing population growth.

Population factors extend beyond North America. The International Monetary Fund found an aging Asian population could be a drag on growth for economies like China and Asia. Chinese growth in gross domestic production of about 6.5 percent nevertheless outpaces the United States, Canada's top trading partner.

"Since 2014, business investment growth in advanced economies has experienced a renewed episode of weakness despite a strengthening in aggregate demand," the Canadian economists reported.

Canadian leaders are working to diversify an economy tied strongly to the United States through diplomatic efforts in Asia. Alberta Trade Minister Deron Bilous this week hosted business delegates from China.

Developments outside of North America, meanwhile, could create more headwinds for growth, the Canadian economists found.

"This rise in macroeconomic uncertainty may reflect a sequence of unanticipated economic and political developments, such as the sharp fall in oil and other commodity prices, crises in several emerging markets, for example Brazil and Argentina, and political developments in the United States and Europe," they reported.

U.S. President Donald Trump has vowed to reconfigure the North American Free Trade Agreement and Canadian leaders have pressed for stronger trade relations with the United States while at the same time looking for development opportunities in Asia.