nationalist or populist policies more generally, threaten to reverse some of the prior productivity gains made through globalization. tariffs on imports are forcing companies to dismantle supply chains and create new ones that are likely to be less efficient. at the same time, uncertainty about the future of trade policies and critical institutions like the world trade organization is having a more insidious effect — companies have cut their investment plans, which also means less potential economic growth in the future. on balance, then, it looks like the global economy is set for continued slow economic growth for mostly structural reasons. for these same reasons, this means that low interest rates are likely to persist too. 1 / 6 bis central bankers'speeches to be clear, i am not making a near - term prediction about the bank of canada ’ s policy rate. i am talking about structural forces acting on the global economy and global interest rates over a period of years. in any era, interest rates fluctuate around a trend line, which is determined by structural forces, not by monetary policy. what i am saying is that in this era, it looks like interest rates are likely to fluctuate around historically low levels. now, one possible consequence of persistently low interest rates is that household indebtedness may continue to increase relative to the overall economy. government indebtedness might also continue to rise as governments try to kick - start sluggish economies. the world stock of debt of all types is now more than three times global gross domestic product ( gdp ). experience shows that high debt levels can amplify the impact of a shock on the economy, such as a rise in unemployment. this is because some borrowers could default on their debts, leading financial institutions to lend less, or even fail. meanwhile, governments with a high debt load may be less able to stimulate a faltering economy. in canada, household indebtedness is our most important financial vulnerability. the latest data show household debt is 177 percent of disposable income, a bit below last year ’ s record high, but still elevated. for some countries it is the stock of government debt that causes the most concern. us government debt is more than 100 percent of gdp and rising quickly. in japan, it is more than 200 percent. in comparison, canada ’ s total government debt is close to 90 percent of gdp, of which federal debt is about 30 percent. policy - makers have taken the lessons learned from the 2008

companies are expecting their sales to either level off or increase modestly over the next year. overall, more firms than in recent surveys say they plan to boost investment spending over the next 12 months. household spending has continued to support the economy, with employment and income continuing to grow outside of energy - intensive regions, particularly in service industries. the bank ’ s accommodative monetary policy will continue to buffer the impact on wealth and income stemming from the fall in resource prices. the rollout of the canada child benefit should start giving an extra boost to households in the second half of this year. as well, the impact of the federal infrastructure spending that was announced in budget 2016 should begin to be felt. we continue to project that these measures together will boost the level of canadian gdp by about 1 per cent over the 2017 – 18 fiscal year. one other new development i ’ d mention is the government ’ s measures to promote stability in the housing market. with house prices still elevated in the vancouver area and resales and starts still robust around toronto, these measures should dampen resale activity in the near term. our analysis and historical experience suggest these measures will reduce the level of gdp by about 0. 3 per cent by the end of 2018, although there is much uncertainty around that estimate. while household debt levels have continued to increase, these measures should, over time, help ease the growth of economic vulnerabilities related to household debt and housing. all told, we now expect growth over the third and fourth quarters to average about 2 1 / 2 per cent, which is lower than we anticipated in our last mpr in july. this reduction reflects the downward revision to exports, the pullback in housing and a shift in the timing of federal infrastructure measures that pushes some of the impact into 2017. we have reduced our growth estimate for this year to 1. 1 per cent. the expansion in both 2017 and 2018 should be about 2. 0 per cent, higher than the growth rate of potential. however, because the output gap is now somewhat larger than we projected and will close later than we expected in july, the profile for inflation is now slightly lower. we project that total cpi inflation will remain below 2 per cent through the end of the year, as disinflationary pressures linked to excess capacity and year - over - year price swings for gasoline will more than offset the inflationary pressure coming from a lower exchange rate. total inflation should be close to the 2 per cent