By IANS,
Toronto : The Bank of Canada, the central bank of the most robust of the G8 economies, has said that global recovery from the financial crisis has begun.
In its economic outlook report released Tuesday, the bank said: “There are now increasing signs that economic activity has begun to expand in many countries in response to monetary and fiscal policy stimulus and measures to stabilize the global financial system.
“However, the recovery is nascent. Effective and resolute policy implementation remains critical to sustained global growth.”
The bank said the Canadian economy has also begun recovery but warned that the rising Canadian dollar could be a hindrance for the resource-based economy.
“Stimulative monetary and fiscal policies, improved financial conditions, firmer commodity prices, and a rebound in business and consumer confidence are spurring domestic demand growth,” the bank said.
“However, the higher Canadian dollar, as well as ongoing restructuring in key industrial sectors, is significantly moderating the pace of overall growth,” it added.
The bank maintained the overnight rate at 1/4 percent – the lowest in Canadian history.
According to the bank’s projection, the Canadian economy will contract by 2.3 percent in 2009 and then grow by 3.0 percent in 2010 and 3.5 percent in 2011.
Apart from cutting the overnight rate to the lowest point in Canadian history last year, the central bank had also pumped billions into the system to ease the credit crunch since the economic crisis began last year.
Canada has been hit the hardest by the US meltdown as its big neighbour down south accounts for more than 85 percent of its trade.
Canada’s auto, manufacturing, oil and gas and lumber industries which are deeply linked to the US, have been the worst hit by the economic crisis.
The nation’s unemployment rate has jumped to 8.6 percent.
According to Statistics Canada, nearly 1.6 million Canadians in a total population of about 33 million are now out of jobs.