The OECD says the recession will not hit Canada as hard as it previously feared, but the Paris-based organization is also suggesting Canada`s central bank keep its benchmark interest rate at a record low for the balance of next year.
In a sweeping global forecast issued yesterday, the Organization for Economic Cooperation and Development said Canada`s gross domestic product will shrink by 2.6% during the current year. That`s an improvement from a March forecast of a 3% contraction. The OECD added that it expects Canada`s economy to grow by 0.7% during 2010, up from a March forecast of 0.3% growth.
For its 30 member countries as whole, the OECD forecast a contraction of 4.1% this year, followed by anaemic growth of 0.7% next year. That was a slight improvement from its previous forecast for a contraction of 0.1% in 2010 following a 4.3% fall this year, and the first time the forecasts have been revised up since 2010.
"This is the first time since 2007 that we have revised up the projection," Jorgen Elmeskov, OECD chief economist, told Reuters.
"The bad news is that the projection still implies that we are only nearing the bottom now and the recovery that follows is going to be a very slow one, probably a fragile one."
The OECD says Canada experienced a sharp contraction during the last quarter of 2008. The report states that a collapse in exports and investment intensified the downturn during the first quarter of 2009, but that things seem to be bottoming out.
"The pace of contraction appears to be slowing, but recessionary conditions are expected to linger through the third quarter, with only a slow recovery thereafter. Unemployment is projected to keep rising until early 2010 and inflation pressures to stay muted."
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In a sweeping global forecast issued yesterday, the Organization for Economic Cooperation and Development said Canada`s gross domestic product will shrink by 2.6% during the current year. That`s an improvement from a March forecast of a 3% contraction. The OECD added that it expects Canada`s economy to grow by 0.7% during 2010, up from a March forecast of 0.3% growth.
For its 30 member countries as whole, the OECD forecast a contraction of 4.1% this year, followed by anaemic growth of 0.7% next year. That was a slight improvement from its previous forecast for a contraction of 0.1% in 2010 following a 4.3% fall this year, and the first time the forecasts have been revised up since 2010.
"This is the first time since 2007 that we have revised up the projection," Jorgen Elmeskov, OECD chief economist, told Reuters.
"The bad news is that the projection still implies that we are only nearing the bottom now and the recovery that follows is going to be a very slow one, probably a fragile one."
The OECD says Canada experienced a sharp contraction during the last quarter of 2008. The report states that a collapse in exports and investment intensified the downturn during the first quarter of 2009, but that things seem to be bottoming out.
"The pace of contraction appears to be slowing, but recessionary conditions are expected to linger through the third quarter, with only a slow recovery thereafter. Unemployment is projected to keep rising until early 2010 and inflation pressures to stay muted."
Read the full article here.