By IANS,
Toronto: Touted as the best among all the G8 economies during the current global slowdown, the Canadian economy is set for a rebound, according to the country’s top bank.
In a report Monday, the Royal Bank of Canada (RBC) said the economy will return to positive growth in 2010 after contracting at an average of 2.5 per cent in 2009. According to the report, the economy is likely to grow by 2.6 per cent in 2010. It will pick up further in 2011 to grow
by 3.9 per cent.
“With the financial crisis behind us and the US economy on the mend, Canada’s economic growth is expected to rise steadily throughout the next year,” said bank senior vice-president and chief economist Craig Wright.
“While challenges remain, a peak in stimulus and infrastructure spending across the federal, provincial and municipal governments, along with low interest rates, should result in a sustained recovery,” he said in a statement. The Canadian government has spent billions of dollars and the country’s national bank has lowered interest rates to historic lows to stimulate the economy.
The stimulus spending will reach its peak next year, leading to better credit conditions to fuel growth in 2010 and 2011, the bank says.
“The price tag for the stimulus is high with large budget deficits, but it is still lower, relative to GDP, than the peaks reached in the early 1990s,” the bank executive said.
A resource-based economy, Canada was hit most by the US downturn as it does 85 percent of its international trade with its giant neighbour down south.
The falling commodity prices and the plunging US auto and housing sectors took a huge toll on the Canadian economy.
According to the report, the Canadian unemployment rate is expected to remain high in 2010 and average 8.7 per cent before falling to 7.8 per cent in 2011.