Canada is expected to avoid sliding back into another recession, but the national economy will experience only modest growth next year, according to Conference Board of Canada.
The board Thursday predicted real gross domestic product (GDP) will increase 2.1% this year and 2.4% in 2012.
That growth is largely due to fundamentally strong commodity prices that continue to drive investment and production in the resource sector, the conference board said.
“Canada’s domestic economy is on stronger footing than many other developed economies,” said Pedro Atunes, director national and provincial forecast at the conference board.
“Employment has recovered from recession levels, housing markets are balanced and business investment has surged at a surprising pace over the past year and a half.”
The conference board believes household spending will be strengthened next year by low financing rates and steady employment gains.
Still, overall government is expected to be a “drag” on the economy due to lower infrastructure investment, and ongoing volatility in U.S. and European markets will weigh on the Canadian economy’s ability to expand.
“A sluggish outlook for the United States is not good news for Canada,” said Atunes, “and the economic situation in Europe is even more uncertain and fragile than the U.S.”
Joel McKay
@jmckaybiv