Bloomberg News

Canada Forecasts Don’t Point to Second Recession, Harper Says

September 21, 2011

Sept. 21 (Bloomberg) -- Canadian Prime Minister Stephen Harper said he hasn’t seen any forecast that the economy will shrink again this quarter and trigger a new recession.

“Clearly there have been economic data that has downgraded our forecast,” Harper, 52, said in an interview at Bloomberg’s New York headquarters today. “I’m not aware of any data that’s forecasting a recession, but it is forecasting slower growth.”

The International Monetary Fund yesterday slashed its Canada growth forecast for this year and next citing the drag from the U.S., and said Harper can afford new spending or tax measures to revive growth. The world’s 10th-largest economy shrank in the second quarter, two years after its last recession, on disrupted exports.

“The trajectory of the Canadian economy will be determined by the global economy,” Harper said. “If there are big material changes we will shift our fiscal policy accordingly.”

In an earlier interview on Bloomberg Television, Harper said that policy makers from other major countries should be able to avoid another recession even amid the most immediate threat posed by Europe’s fiscal crisis.

“We need to see some real solutions that are going to last and move us forward,” Harper said in reference to Europe. “I still think there is every opportunity for governments to muddle through and keep the recovery going, although admittedly we are looking at a period of very low growth.”

Harper won his first majority government in May elections promising to balance Canada’s budget by the fiscal year that begins April 2014. The Conservative Party led by Harper had been in government with a minority of seats in the legislature since 2006.

Economic Drag

The rise in Canada’s dollar against the U.S. dollar in recent years has been another drag on Canada’s economy, Harper said in the television interview.

“There are some clouds and one of them is the upward pressure on the dollar creates some practical problems for Canadian producers,” he said.

The Canadian currency, known as the loonie for the image of the aquatic bird on the C$1 coin, depreciated 1.3 percent to 1.0056 cents per U.S. dollar at 3:46 p.m. in Toronto.

Canada doesn’t have an official arbiter of recessions like the U.S. Many economists in the country consider two or more consecutive quarters of a drop in gross domestic product to herald a recession.

--With assistance from Andrew Mayeda in New York. Editors: David Scanlan, Paul Badertscher

To contact the reporters on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net; Greg Quinn in Ottawa at gquinn1@bloomberg.net

To contact the editors responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net; David Scanlan at dscanlan@bloomberg.net.


American Apparel's Future
LIMITED-TIME OFFER SUBSCRIBE NOW

(enter your email)
(enter up to 5 email addresses, separated by commas)

Max 250 characters

 
blog comments powered by Disqus