Economic growth in Canada to resume in the second half of 2009

The Canadian economy is expected to begin growing in the second half of 2009, but the effects of the global recession will linger into 2010 and the recovery will be slow, according to the Conference Board’s Canadian Outlook – Summer 2009. (Read other recent Conference Board reports.)

“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 U.S. 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.”

Real gross domestic product in Canada 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. In both Canada and the U.S., consumer confidence has partially recovered from the depths that it reached last winter. Consumer spending will grow modestly next year, following a decline in 2009. The main contributors to the rebound in 2010 will be strong growth in public infrastructure spending and a recovery in both resource prices and exports.

Canadian exports are expected to decline for the second consecutive year – by 14.2 per cent in 2009. However, 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, the board says.
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