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Source: THE CANADIAN PRESS
OTTAWA – The financial turmoil in the United States will limit Canadian economic growth to 0.8 per cent this year but Canada will avoid a recession, says the Conference Board of Canada.
In its latest outlook on the world economy, the Ottawa-based economic research group said Friday that weak growth will last through 2009 as Canada, Europe and Asia buckle under the weight of the worst financial crisis in half a century in the United States.
The Conference Board predicts global growth will fall to 2.8 per cent this year and 2.4 per cent in 2009. The U.S., which avoided a recession earlier this year because of strong exports, is sinking into recession because of weak consumer spending.
“A number of developed countries are close to recession, and given the current state of financial markets, weak economic growth is expected to last through 2009,” said Kip Beckman, the board’s principal research associate.
“Developing countries such as China and India have picked up the slack in the world economy, although they too are now being affected by the global slowdown.”
The board survey backs up a Bank of Canada assessment this week that the Canadian economy will tread water this year and next – with neglible growth – before stronger expansion in 2010.
Canada has been hurt by the restructuring of the manufacturing sector based in Ontario and Quebec and the recent pullback in resources industries because of falling world prices for minerals, oil and grains.
The board said that with GDP growth stalled in the United Kingdom, Germany, and France, the economic outlook for Europe is pessimistic.
Meanwhile, Japan is likely to slip into recession, although most other Asian economies are expected to avoid recessions.
Even China’s economy has lost momentum lately, due to a slowdown in export growth. After expanding by 12 per cent in 2007, real GDP growth will slip into single digits this year and next.
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