22 July 2010
Canada’s economy is already in the middle of a serious pull-back, especially, compared with 6.1% acceleration in the first three months of 2010.
The bank said Canada’s economy will advance 3.5% this year and 2.9% – next year.
Yes, the employment level has increased, but the hours worked are still down.
Perhaps, it will cool off the consumer spending appetite.
The bank’s forecast concerning the Canadian dollar is also not very optimistic, near 96 cents, mostly, due to lower global demand and softer prices.
“Some of the risks that were mentioned in the April report have materialized. The main problem is sovereign debt concerns in Europe,”- the bank said.
“Actually, the influence can be serious. First of all, it may provoke a strong disruption to bank funding markets that will increase borrowing costs. In addition to it, the negative effects on Canadian exports could be substantial”.
Generally, the bank is concerned about the possibility of the “private demand around the world to be insufficient to sustain the recovery.”
The warning almost mirrors Fed chairman Ben Bernanke’s announcement to Congress on Wednesday that “the economic outlook remains unusually unstable.”