A day after federal Finance Minister Joe Oliver deflected concerns over Canada's poor economic showing to start 2015, the Organization for Economic Co-operation and Development has slashed its growth expectations — now expecting the country's gross domestic product to only expand by 1.5 per cent this year.

The Paris-based organization of wealthy nations on Wednesday cited the ongoing impact of cheap oil in slashing its expectations for Canada's economy.

"The recent fall in oil prices has resulted in declines in related investment and GDP," the group said.

The 1.5 per cent forecast is well below the group's projection as recently as last November, when it was calling for 2.6 per cent growth. In March, the OECD ratcheted that down to 2.2 per cent.

Two Canadian banks downgraded their outlooks for the Canadian economy in forecasts released Wednesday. RBC is projecting a 1,8 per cent growth rate with a sharp pickup later in the year, but CIBC notes the slower-than-expected U.S. economy and says Canada will achieve only 1.4 per cent growth.

At 1.5 per cent this year, the group expects Canada's economy to expand by an amount that's less than what economists think is a healthy natural inflation rate, which is two per cent.

According to the most up-to-date official data, Canada's inflation rate is currently at around 0.8 per cent. The OECD doesn't expect that figure to tick up to the desired two per cent level until the middle of next year — and that's with interest rates at current historical lows.

All things being equal, low interest rates should spur inflation because that means money is cheap, so people have a strong incentive to borrow and spend, behaviour that stimulates the economy and raises inflation.

Election looming

The experts' adjustments are also rolling in as the October election date approaches, breathing life into the always-central political debate on the economy.

Oliver told a parliamentary committee Tuesday he doesn't anticipate a recession, typically defined as two or more consecutive quarters of economic contraction.

On Wednesday, NDP finance critic Nathan Cullen challenged Oliver in the House of Commons on the OECD's downgrade to its growth projection for Canada.

"This minister refuses to take off the rose-coloured glasses and face reality," Cullen said.

Oliver responded by arguing the OECD report confirmed the country's sound fiscal situation and projected the Canadian economy to grow by 2.3 per cent in 2016.

The federal Finance Department bases its forecasts on the average predictions of 15 private-sector economists. Liberal MP Ralph Goodale called on the government Wednesday to table a new fiscal update, documents usually based on fresh economist projections.

2016 looks better

The OECD does have slightly better expectations for Canada's economy over the medium term.

Thanks to an expected rebound in non-oil exports because of the lower loonie, the OECD expects 2016 will be a better year for Canada, with the economy expanding by 2.3 per cent — better than the 2.1 per cent figure it had been expecting in March.

"Financial conditions remain supportive for investment overall and higher demand for non-energy exports and related capacity requirements should support investment in the medium term," the OECD said.

Canada isn't the only country on the OECD's gloomy-outlook list. The organization now expects U.S. economic growth to slow to two per cent this year from 2.4 per cent in 2014, compared to March, when it forecast an acceleration to 3.1 per cent in 2015.