Friday, November 7, 2008

Canada may skirt recession: IMF

Julian Beltrame The Canadian Press

Evidence was mounting yesterday that Canada may be following the rest of the world on the path to recession, even as global policy-makers look to new measures to combat the economy-destroying financial crisis.
In its latest update, the International Monetary Fund sharply downgrades the economic outlook for Canada and the rest of the world from its previous projection a month ago.
The world organization, head quartered in Washington, said Canada's economy will avoid recession by the slightest of margins with 0.3 percent growth next year, while all other G7 leading industrial counties will see their economies actually contract, led by Germany and the U.S.
The IMF's latest forecast for Canada is well down from the relatively robust 1.2 per cent advance it had predicted only last month.
"Prospects for global growth have deteriorated over the past month,'' the body said, urging governments to act to stimulate their economies.
The darkening outlook shook markets around the world, with stocks plunging the Tokyo index more than six per cent, while shares fell 3.3 per cent in Toronto and 4.8 per cent in New York's main exchange.
Yesterday brought more indications that the economy in Canada is slowing sharply.
An official government report showed bankruptcies in Canada were climbing steeply even before the worst of the financial crisis hit, increasing by almost 19 per cent in September from the previous month and 28 per cent from a year ago.
And in an indication that Canada's housing slump is deepening, permits for new housing fell 4.9 per cent during September, the second straight monthly decrease and sixth during the year.
Overall, building permits rose 13.4 per cent in September largely on the strength of publicly financed non-residential construction.
Worse news is expected to come this morning with the new employment report from Statistics Canada.
Many economists believe the October jobs number will usher in an uncomfortable period of monthly job losses that will begin to track what is occurring in the U.S., which has already shed 760,000 jobs this year.
"The worst part for the economy is largely still ahead of us,'' said Derek Holt, vice-president of economics with Scotia Capital.
"The speed at which things are deteriorating is alarming.''

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