Canada to See Marginal Growth

Terry Flanagan

The economic landscape in Canada is set to see modest growth in the coming year.

While the markets in the U.S. and Europe remain volatile, Canada’s economy is poised for growth as it looks to avoid a double-dip recession.

“Canada’s domestic economy is on stronger footing than many other developed economies,” noted Pedro Antunes, director of the Conference Board of Canada’s National and Provincial Forecast division in newly released research. “Employment has recovered from recession levels, housing markets are balanced, and business investment has surged at a surprising pace over the past year and a half. However, a sluggish outlook for the United States is not good news for Canada and the economic situation in Europe is even more uncertain and fragile than in the U.S.”

The outlook is under the assumption that the U.S. and European authorities will implement the policies necessary to fight back a double-dip recession.

“When we look at the fundamentals for the U.S. economy, it has been floored,” Antunes told Markets Media. “The bubbles have burst, and there’s nothing else to burst. Companies are cash flow positive, businesses have fixed their balance sheets, industrial production, exports, those are up and doing well. We’re waiting to see the last piece, to tie that better performance on the business side, and that’s better employment. The picture is much better for Canada, we’ve done very well through the recession.”

The Conference Board’s forecast for the U.S. for the remainder of 2011 has been downgraded to less than 2 percent growth, but it is still expected that a recession will be avoided. “Businesses are flush with cash, bank commercial lending activity has finally begun to grow again, and industrial and export activity have been rising,” the report said. “All of this is expected to help the private sector bolster employment over the coming months, which would go a long way to reviving consumer and investor confidence in the U.S.”

Canada is expected to register a 2.1 percent growth in gross domestic product in 2011, and 2.4 percent in 2012.

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