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Royal Bank of Canada has become the first of the country`s major banks to officially predict the recession will end in the third quarter as fiscal and monetary stimuli begin to heal the economy.
With housing resales up, manufacturing declines slowing and the third quarter just two weeks away, Canada can look forward to better times ahead, the bank said.
But despite the return to growth, Paul Ferley, the assistant chief economist at RBC Capital Markets, said it would take until next year for the recovery to gain full momentum and for consumers to cast aside their caution.
RBC said Monday the Canadian economy would emerge from three quarters of decline with a mild, but nevertheless positive, annualized growth rate of 0.8% in the third quarter followed by 2.4% in the fourth quarter. At the same time, it predicts the United States to end its four quarters of malaise with growth of 0.5% and 2.6%, respectively.
But even as exports improve and GDP ticks higher, Canada`s unemployment rate is expected to continue to grow, topping out at 9.2% in the fourth quarter of this year as businesses hit by recession gather the confidence to hire again.
Over the year, Canada is expected to slightly outperform the U.S., with the economy shrinking 2.4% in 2009 compared with a drop of 2.9% south of the border. Canada is predicted to grow 2.5% in 2010, compared with 2.1% in the U.S.
"We`re assuming that the aggressive policy response in Canada and the U.S. will be successful, and we`re getting indications that they have proven successful in getting financial markets moving again," Mr. Ferley said. "Overlaid on top of that is the aggressive fiscal policy in both Canada and the U.S. and our expectation that will do the trick in terms of strengthening the U.S. economy."
Read the full article here.
With housing resales up, manufacturing declines slowing and the third quarter just two weeks away, Canada can look forward to better times ahead, the bank said.
But despite the return to growth, Paul Ferley, the assistant chief economist at RBC Capital Markets, said it would take until next year for the recovery to gain full momentum and for consumers to cast aside their caution.
RBC said Monday the Canadian economy would emerge from three quarters of decline with a mild, but nevertheless positive, annualized growth rate of 0.8% in the third quarter followed by 2.4% in the fourth quarter. At the same time, it predicts the United States to end its four quarters of malaise with growth of 0.5% and 2.6%, respectively.
But even as exports improve and GDP ticks higher, Canada`s unemployment rate is expected to continue to grow, topping out at 9.2% in the fourth quarter of this year as businesses hit by recession gather the confidence to hire again.
Over the year, Canada is expected to slightly outperform the U.S., with the economy shrinking 2.4% in 2009 compared with a drop of 2.9% south of the border. Canada is predicted to grow 2.5% in 2010, compared with 2.1% in the U.S.
"We`re assuming that the aggressive policy response in Canada and the U.S. will be successful, and we`re getting indications that they have proven successful in getting financial markets moving again," Mr. Ferley said. "Overlaid on top of that is the aggressive fiscal policy in both Canada and the U.S. and our expectation that will do the trick in terms of strengthening the U.S. economy."
Read the full article here.
