July 14, 2009
by Purchasingb2b staff
Ottawa—The Canadian economy is expected to start growing in the second half of the year, but the effects of the global recession will linger into 2010 and recovery will be slow, according to the Conference Board of Canada.
Its Canadian Outlook—Summer 2009 report found real gross domestic product will fall by 1.9 per cent in 2009. In 2010, the Canadian economy is forecast to grow by 2.7 per cent—still much weaker than typical post-recession growth.
"The current recession is so widespread that its effects are expected to linger for longer than the typical business cycle," said Pedro Antunes, director of national and provincial forecast with the Conference Board.
"Although the US economy is forecast to return to growth in the second half of this year, battered American consumers will be saving more of their incomes in the foreseeable future. As a result, the global recovery will be soft, and Canada is not expected to achieve economic growth significantly above its potential until at least 2011."
In both Canada and the US, consumer confidence has partially recovered from the lows it reached last winter. Consumer spending will grow modestly next year.
The main contributors will be public infrastructure spending and a higher resource prices and exports. Canadian exports are forecast to grow by 2.8 per cent in 2010. Canadian exporters of automobiles, lumber and construction materials have been through the worst of the business cycle, according to the board.
Infrastructure spending, record-low interest rates and other government initiatives will provide a short-term boost to the economy.
—Photo: Higher resource prices and exports will help drive the recovery in consumer spending.