Bank of Canada Opening Statement_January 21, 2010

  • The global economic recovery is underway. Economic and financial developments have been slightly more favourable than we projected in October, and the outlook for global economic growth through 2010 and 2011 is somewhat stronger.

  • Although the recession in Canada was severe, with real GDP contracting for three consecutive quarters, the magnitude of the downturn was more modest than in other major advanced economies. In particular, domestic demand held up much better in Canada than elsewhere, reflecting the soundness of Canada's banking system, relatively healthy household and corporate balance sheets, and the speed and scale of monetary policy actions.

  • Economic growth in Canada resumed in the third quarter of 2009 and is expected to have picked up further in the fourth quarter. Nevertheless, considerable excess supply remains, and the Bank judges that the economy was operating about 3 ¼ per cent below its production capacity in the fourth quarter of 2009.

  • In Canada, the recovery is expected to evolve largely as anticipated in October, with the economy returning to full capacity in the third quarter of 2011. This recovery is still expected to be more subdued than usual. The main factors supporting the Canadian recovery are: monetary and fiscal policy support, increased confidence, a firming global economy, and higher terms of trade.
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    Rania Agha-Alshurafa

    Rania Agha-Alshurafa

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