Poloz, who updated his outlook for the economy last week, spoke to Global News’ The West Block Sunday, explaining why there has been slower-than-projected growth.
“It’s the result of all those low oil prices that we had back last fall and the transportation constraints, and then we had some very nasty weather, which I’m sure you’re just barely forgetting now,” Poloz explained to host Mercedes Stephenson.
“The biggest threat to a number of global world economies, including our own,” is that of a trade war, he said.
“There are 47 economies globally that are seeing this slowdown all at the same time,” Poloz said, describing it as a “fairly temporary phenomenon” that has much to do with the United States.
“It’s around the trade conflict that has been basically initiated by the U.S. administration,” he explained.
Poloz noted that while the spat with China is the current focal point, the tensions extend beyond that to other actions such as steel and aluminum tariffs and the resulting retaliatory tariffs.
WATCH: Bank of Canada says growth expected to pick back up in latter 2019
On Wednesday, the Bank of Canada kept its key interest rate unchanged and it downgraded its 2019 growth forecast based on its prediction after the economy nearly ground to a halt at the start of the year.
The economy was operating close to full tilt for most of 2017 and 2018 — before a sudden deceleration in the final three months of 2018 saw the economy expand by just 0.4 per cent.
The bank predicted growth in real gross domestic product of 1.2 per cent for 2019, down from its January forecast of 1.7 per cent. It projected growth of just 0.3 per cent in the first three months of 2019.
Poloz told Stephenson that the signing of the renegotiated U.S.-Canada-Mexico trade deal, known as CUSMA in Canada, would provide “a lot of relief and confidence that we were progressing.” But as of now, the deal remains unsigned.
“Of course, that just leaves all those negotiations kind of in limbo. So right now, companies, as they report to us, are again hesitating to invest until they know more,” he said.
“We’re hoping that the government’s new measures to accelerate depreciation for investments will work in the opposite direction and encourage more companies to invest now.”
WATCH: Poloz says all indicators are that Canadian economy remains strong
Despite trade uncertainties, Poloz said that the Bank of Canada is “not forecasting anything remotely like a recession.”
“In fact, we expect the economy to recover to around 2 per cent growth by the middle of this year, and through this year and next year,” he explained. “And that the world economy in general, would be growing around 3.25 per cent, which is about its potential growth rate.”
— With files from The Canadian Press