The latest Monetary Policy Report from the Bank of Canada states that the Canadian economy is projected to grow in 2010.The real GDP is projected to grow by 2.5% in 2010 and 4.7% in 2011.This year though the GDP will fall by 3.0%.
Some of the key point from the report are:
- Recession in Canada will be deeper than expected due to the intense and synchronized global recession
- Core Inflation will diminish this year but gradually increase and reach 2% in 2011
- Progress on measures to restore normal flow of credit have been slow in the US
- Slowdown in the US housing and auto sectors magnified the weakness in the Canadian economy as exports fell sharply
- Sales of new autos and homes in the US are projected to rebound in the second half of 2009
- The strength of balance sheets of banks,corporations and households in Canada have helped to make the financial system fare better than other countries in this global crisis
- Economic conditions deteriorated further in 1Q,2009 with exports in the forest products, automotive and materials sectors posting more declines
- Due to weak domestic demand import volumes will drop sharply in 2009
- Economic recovery in Canada will be much more rapid than in USA since Canadian households are in a much better position financially
- Housing market correction in Canada is expected to be much less severe than in the US
Chart – Growth in Real GDP Expected to Rebound in 2010
Source: Bank of Canada
