Canadian economy has stabilized, growth has begun: Minister Flaherty

TORONTO - The chorus of voices predicting Canada is emerging from the recession grew louder Thursday as Federal Finance Minister Jim Flaherty chimed in.

The Canadian economy has stabilized and recovery has started, he told reporters in Toronto.

"We're moving into a period of modest economic growth," he said after participating in the groundbreaking for a new park on the city's waterfront.

"Consumer confidence is relatively strong and growing, we are seeing good home sales numbers (and) some improvement in retail sales."

Nearly 1000 infrastructure projects are now underway across the country, he added.

Flaherty's tune was consistent but more measured than the Bank of Canada, which Thursday in Ottawa declared the recession essentially over. Asked whether Canada is pulling out of the recession, he said "I think we're going in the right direction."

Projections by the central bank Thursday were optimistic, forecasting the economy will bounce back from recession much faster than the United States.

It said the summer quarter should produce growth of about 1.3 per cent, after three quarters of contraction.

"Canada went into the recession much later than the United States (and) will come out more strongly than the United States," Flaherty said, "Because our fiscal fundamentals are stronger, we weren't running big deficits in Canada."

Despite the rosy outlook, the central bank cautioned that the remaining fragility of financial systems in the United States and Europe could still pop up to shake the global economy. It also warned Canadians to keep the recovery in perspective as nascent and dependent on massive government stimulus spending.

American bankers have also suggested recovery is on its way, noting that while the U.S. economy is still vulnerable, the pace of decline has slowed and growth is predicted to begin again in the second half of this year.

Source: Canadian Business Online

Marlene Ofter

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