International Monetary Fund forecasts gloomier economic times for Canada
THE CANADIAN PRESS
OTTAWA - The International Monetary Fund says Canada's economic growth will slip to 1.8 per cent this year in the face of a slump in the United States, the high loonie and more moderate domestic demand.
The Washington-based agency had projected 2008 growth of 2.3 per cent in its forecast last fall, but conditions have deteriorated since then, particularly in the U.S., Canada's largest trading partner.
The IMF report said it is unlikely the Canadian economy can decouple from the U.S. because trade and financial linkages are among the strongest in the industrial world, with the U.S. receiving 75 per cent of Canada's exports.
Still, the agency predicts Canada's economy will weather the storm better than most.
But the IMF warns that the downside risks are strong and Canada could fall into a deep recession if the American economy contracts, the U.S. dollar plummets and commodity prices fall.
In that scenario, Canada's economy could shrink by 3.3 per cent this year and 3.8 per cent in 2009 before recovering to barely above zero in 2010, the IMF says.
© The Canadian Press, 2008