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Whole Lotta Love Seen for Canadian Economy

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The International Monetary Fund on Wednesday hiked its outlook for Canadian economic growth in 2010, raising its forecast for the year to 1.6% from the 1.2% it had predicted in April. As well, Canada's economy will contract less than previously expected in 2009, falling 2.3% compared with the 2.5% decline earlier envisioned, the international organization said.

The projections came as the IMF also upped its outlook for global economic growth, to 2.5% in 2010 from its earlier forecast of 1.9%, citing a better-than-expected improvement in global financial conditions.

"The good news is that the forces pulling the economy down are decreasing in intensity," the IMF said in a release accompanying its report. "The bad news is that the forces pulling the economy up are still weak. The balance is slowly shifting, and this leads us to predict that, while the world economy is still in recession, the recovery is coming. But it is likely to be a weak recovery."

The report was released as leaders of the G8 industrialized countries met in Italy and were expected to warn Wednesday that the battered world economy faces "significant risks" despite recent signals of improved confidence.

The leaders' declaration was also expected to leave open the option that the eight member countries – the U.S., Russia, Japan, Canada, Great Britain, France, Germany and Italy – might consider further spending and tax measures to stimulate economic activity, although Prime Minister Stephen Harper suggested earlier Wednesday that leaders show greater caution before initiating more spending plans and tax breaks.