Canadian Economy To Rebound in 2010

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

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