Canada is heading into a worse recession than anyone expected, one that could last until almost 2010, said economists from the country's big five banks on Monday.
The word "recession" would not describe the deep structural problems affecting everything from the U.S. housing sector to the Canadian oil industry, said Bank of Nova Scotia chief economist Warren Jestin after the banks presented their perspectives at the Economic Club.
In their most recent economics forecast, Scotiabank economists predict recessions for both the U.S. and Canada, economic slides that will require central bankers in both countries to cut interest rates by at least a full percentage point.
All agree that a slide in commodity prices bodes ill for the Canadian economy, which is heavily dependent on the production and export of oil and gas, metals and minerals.
Bank of Montreal economist Doug Porter said the direction of Canada's economy depends on whether the financial-sector troubles in the United States start to settle down.
"At this point, if this kind of volatility keeps up, I think we're looking at a much more serious downturn than the mild recession that most of us are talking about," he said.
The cautious outlook was echoed by Don Drummond of TD Bank, who said the Canadian economy would not see any growth until late 2009.
Craig Wright, chief economist at RBC Financial Group, held a more pessimistic view on the Canadian dollar, predicting it would slide "just under" 90 U.S. cents by the end of next year. The Canadian dollar was down 1.78 U.S. cents to 90.68 U.S. cents US Monday morning.
(Xinhua News Agency October 7, 2008)
