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Canadian Economy to Slow, Economists SayThursday, January 06, 2011 > 10:53:33
(CBC News - via I.E. Canada)
Canada's economy may have performed better than its U.S. counterpart last year, but some economists see the roles switching in 2011. They say an economic boost from a recently announced tax and fiscal stimulus package in the U.S., coupled with the winding down of the stimulus spending programs in Canada, will put the American economy in front this year.
"Here we'll see the U.S. coming back. We'll see Canada slowing down.… We're not going to have a rising unemployment rate or anything like that. But it won't be quite the bragging rights for the finance minister [Jim Flaherty] that he had last year," said economist Mike McCracken, founder of Informetrica Ltd.
Last week, the Canadian Chamber of Commerce also said "more prudent spending" by Canadians is a factor in the country's slowing economic growth. Gross domestic product expanded by 2.3% in the second quarter of 2010 and only one per cent in the third quarter. Some economists expect growth to have been only 1.5% in the fourth quarter.
The federal government posted a deficit of $4.1 billion in October, up from $3.1 billion in the same month last year, the Department of Finance said last month. October's figure brings the total deficit for the government's fiscal year to $21.5 billion over seven months, compared with $31.9 billion in the same period in 2009.
The Finance Department said spending related to the federal government's economic stimulus program accounted for $10 billion of the seven-month total.
The Conservative government managed the historically high $55.6-billion shortfall in the 2009 fiscal year as billions flooded out of Ottawa's coffers to fund infrastructure projects across the country. The government has a $45.4-billion deficit target for the current fiscal year, which ends on March 31.
Glenn Hodgson, chief economist with the Conference Board of Canada, said it is now time to turn attention away from stimulus spending and focus on the deficit. "Now's the time to start turning off the tap and show steady progress towards balancing the books. So there frankly isn't a lot of scope for new spending initiatives," he said.
Canadians will get a first look at how the economy is faring later this week when Statistics Canada issues its jobs report for December on Friday. Economists expect that the economy created another 20,000 jobs, on top of the 15,200 created during the previous month.