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In a speech to the Official Monetary and Financial Institutions Forum in London, Wilkins added: “We have to adapt to this new reality of lower potential growth. The faster we do this, the safer the financial system will be.”

That weakening in the global economy can be attributed to two factors — labour supply and productivity — which “are rising more slowly than in the past … contributing to the slowdown in global potential growth,” according to the text of her speech.

The central bank estimates that potential growth in global GDP has declined from a peak of five per cent in 2005 to slightly more than three per cent this year. A two-point decline in global output works out to US$1.5 trillion in lost value in 2006. In five years, if that pace of output continues, the figure could rise to US$9 trillion.

So far this year, Canada’s economy has struggled with inconsistent growth, with the wildfires in Alberta seen as the primary reason for a 1.6-per-cent contraction in GDP over the second quarter. But many economists are expecting a rebound of about 3.5 per cent in the third quarter of this year and growth of about two per cent in the final three months of 2016.

“Slow growth worries me as a central banker, not only because it reduces our room to manoeuvre to achieve our inflation target. It also worries me because slower potential growth materially increases risks to financial stability,” Wilkins said. “Natural by-products of slower potential growth are not only weaker corporate profits and dividends, but also a lower average rate of return on investments.”