A recent economic retake of the predicted recession recovery for Canada shows the country is not improving as fast as hoped. As a matter of fact, it's been stated that Canada is slowing much quicker than previously anticipated. However, the Bank of Canada is confident Canada will not slip into a second recession and the economy will once again pick up.
The Central Bank shares concerns that the economic weakness in the United States combined with the global uncertainty due to Europe's ongoing debt issues could have a negative affect on both Canadian and global recoveries in general. However, some confidence has been resumed from government plans that have been put into place to prevent additional European deficits from getting out of control. Mark Carney from the Bank of Canada says, "Those responses took out ... the possibility of something very bad happening because of the debt burden." Carney also adds, "Given the profile of growth in the three per cent area both in Canada and the United States, the prospect of that (double-dip recession) is very low."
The unfortunate domino effect of the slow global recovery will hit Canada especially as the demand for Canadian resources such as exports, soft lumber and other goods will decline. The Bank of Canada is expecting the country's third-quarter growth to be even more conservative with a 2.8 per cent increase, 0.7 per cent lower than previously hoped. Overall, it is expected that Canada's growth should average 3.5 per cent for 2010 and an anticipated 2.9 per cent for 2011.
However, the Bank of Canada is certain the country is stable enough to handle the most recent of its lending increases. Short-term interest rates saw a quarter point spike for the second time in two months and is expected to increase another quarter point in the Fall. With the national jobless rate still sitting at 7.9 per cent, it could take a few years for Canada to see that rate dip below the pre-recession six per cent average.
Average Canadians will take a little longer to recover from the recession as both job growth and household incomes remain moderate. Even with the sharp employment gains, 400,000 additional jobs since July 2009, available working hours and pay raises have remained low which instils concerns that consumer spending will also remain low. Despite these numbers, Michael Gregory from the Bank of Montreal feels that Canadians will have time to adjust to the bank's rate increases.
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